The Labour-led government in New Zealand has settled on a new mantra when it comes to addressing the US-China rivalry. It claims that New Zealand is ideally situated to become a bridge between the two great powers and an honest broker when it comes to their interaction with the Southwest Pacific. This follows the long-held multi-party consensus that New Zealand’s foreign policy is independent and autonomous, and based on respect for international norms and multinational institutions.

The problem is that the new foreign policy line is a misleading illusion. It ignores historical precedent, the transitional nature of the current international context, the character and strategic objectives of the US and the PRC and the fact that New Zealand is neither independent or autonomous in its foreign affairs.

The historical precedent is that in times of conflict between great powers, small states find it hard to remain neutral and certainly do not serve as bridges between them. The dilemma is exemplified by the island of Melos during the Peloponnesian Wars, when Melos expressed neutrality between warring Athens and Sparta. Although Sparta accepted its position Athens did not and Melos was subjugated by the Athenians.

In stable world times small states may exercise disproportionate influence in global affairs because the geopolitical status quo is set and systemic changes are incremental and occur within the normative framework and around the margins of the system as given. When international systems are unstable and in transition, small states are relegated to the sidelines while great powers hash out the contours of the emerging world order—often via conflict. Such is the case now, which has seen the unipolar system dominated by the US that followed the bi-polar Cold War now being replaced by an emerging multi-polar system aggregating new and resurgent powers, some of which are hostile to the West.

In this transitional moment the US is in relative decline and has turned inward under a Trump administration that is polarizing at home and abroad. It is still a formidable economic and military power but it is showing signs of internal weakness and external exhaustion that have made it more reactive and defensive in its approach to global affairs. China is a rising great power with global ambition and long-term strategic plans, particularly when it comes to power projection in the Western Pacific Rim. It sees itself as the new regional power in Asia, replacing the US, and has extended its influence world-wide.That includes involvement in the domestic politics and economic matters of Pacific Island states, including Australia and New Zealand.

China’s rise and the US decline are most likely to first meet in the Western Pacific. When they do, the consequences will be far reaching. Already the US has started a trade war with the Chinese while reinforcing its armed presence in the region at a time when China cannot (as of yet) militarily challenge it. China has responded by deepening its dollar and debt diplomacy in Polynesia and Melanesia as part of the Belt and Road initiative, now paralleled by an increased naval and air presence extending from the South and East China Seas into the blue water shipping lanes of the Pacific.

There lies the rub. New Zealand is neither independent or autonomous when it confronts this emerging strategic landscape. Instead, it has dichotomized its foreign policy. On the security front, it is militarily tied to the US via the Wellington and Washington Declarations of 2010 and 2012. It is a founding member and integral component of the Anglophone 5 Eyes signal intelligence gathering network led by the US. It is deeply embedded in broader Western security networks, whose primary focus of concern, beyond terrorism, is the hostile activities of China and Russia against liberal democracies and their interests.

On trade, New Zealand has an addict-like dependency on agricultural commodity and primary good exports, particularly milk solids. Its largest trading partner and importer of those goods is China. Unlike Australia, which can leverage its export of strategic minerals that China needs for its continued economic growth and industrial ambitions under the China 2025 program, New Zealand’s exports are elastic, substitutable by those of competitors and inconsequential to China’s broader strategic planning. This makes New Zealand extremely vulnerable to Chinese economic retaliation for any perceived slight, something that the Chinese have been clear to point out when it comes to subjects such as the South China island-building dispute or Western concerns about the true nature of Chinese developmental aid to Pacific Island Forum countries.

As a general rule issue linkage is the best approach to trade and security: trading partners make for good security partners because their interests are complementary (security protects trade and trade brings with it the material prosperity upon which security is built). Absent that, separating and running trade and security relations in parallel is practicable because the former do not interfere with the latter and vice versa. But when trade and security relations are counterpoised, that is, when a country trades preferentially with one antagonist while maintaining security ties with another, then the makings of a foreign policy conundrum are made. This is exactly the situation New Zealand finds itself in, or what can be called a self-made “Melian dilemma.”

Under such circumstances it is delusional to think that New Zealand can serve as a bridge between the US and China, or as an honest broker when it comes to great power projection in the Southwest Pacific. Instead, it is diplomatically caught between a rock and a hard place even though in practice it leans more West than East.

The latter is an important point. Although a Pacific island nation, New Zealand is, by virtue of its colonial and post-colonial history, a citizen of the West. The blending of Maori and Pacifika culture gave special flavor to the Kiwi social mix but it never strayed from its Western orientation during its modern history. That, however, began to change with the separation of trade from security relations as of the 1980s (where New Zealand began to seek out non-Western trade partners after its loss of preferred trade status with UK markets), followed by increasingly large waves of non-European immigration during the next three decades. Kiwi culture has begun to change significantly in recent years and so with it its international orientation. Western perspectives now compete with Asian and Middle Eastern orientations in the cultural milieu, something that has crept into foreign policy debates and planning. The question is whether the new cultural mix will eventuate in a turn away from Western values and towards those of Eurasia.

The government’s spin may just be short term diplomatic nicety posing as a cover for its dichotomous foreign policy strategy. Given its soft-peddling of the extent of Chinese influence operations in the country, it appears reluctant to confront the PRC on any contentious issue because it wants to keep trade and diplomatic lines open. Likewise, its silence on Trump’s regressions on climate change, Trans-Pacific trade and support for international institutions may signal that the New Zealand government is waiting for his departure before publicly engaging the US on matters of difference. Both approaches may be prudent but are certainly not examples of bridging or brokering.

While New Zealand audiences may like it, China and the US are not fooled by the bridge and broker rhetoric. They know that should push come to shove New Zealand will have to make a choice. One involves losing trade revenues, the other involves losing security guarantees. One involves backing a traditional ally, the other breaking with tradition in order to align with a rising power. Neither choice will be pleasant and it behooves foreign policy planners to be doing cost/benefits analysis on each because the moment of decision may be closer than expected.

International relations is about exercising power to achieve objectives on the global stage. The actors that do so are states, companies, non-governmental organizations or criminal and non-state political actors acting directly or as proxies. The tools they employ have traditionally included hard power, which is the threat and use of diplomatic, economic and military coercion; soft power, which involves the persuasive appeal of diplomatic, cultural and economic engagement; and smart power, which is a hybrid, carrot and stick approach where hard and soft power is combined into a package of positive and negative incentives for cooperation and dissuasion. International norms are designed to encourage soft and smart power solutions to contentious issues, with hard power used as the weapon of last resort.

Recently a new form of approach has emerged on the world scene, one that is wielded by authoritarian regimes that seek to alter or undermine the ideological consensus and institutional stability of liberal democracies. It is called sharp power.

Sharp Power.

Sharp power is an extension of smart power but with a subversive, norm-violating twist. Its purpose is to condition the internal narrative of democratic states in ways that are favorable to the authoritarian state employing it. This includes influence operations like those used by the People’s Republic of China in New Zealand, where so-called United Front organizations (such as community organizations and business associations) are employed as “magical weapons” designed to influence the way in which New Zealand political and economic elites view the world system and more specifically, to align these elites with Chinese positions on international affairs. Taking advantage of opaque campaign finance laws, financial donations have been used by Chinese front organizations as a means of currying favor in the New Zealand political system, much in the way the PRC’s so-called cheque book diplomacy has shifted foreign policy perspectives throughout the community of Pacific island states.

Sharp power also includes undertaking disruption operations where, via cyber-hacking and disinformation campaigns on social media, popular faith in the institutions governing everyday life are undermined. These include the placement of so-called fake news stories in major social media outlets, malicious hacking of banking systems and government bureaucracies responsible for basic public good provision, automated supply chain disruptions and hidden control of targeted media outlets. Employment of sharp power methods such as these has the advantage of offering deniability to the perpetrators, especially when they are routed through third party systems or placed on open party platforms that disguise their point of origin. These malicious activities run in concert with traditional espionage and influence operations in a multi-faceted strategy aimed at subverting the ideological and institutional foundations of democratic societies. A loss of faith and trust in liberal democracy is seen as a win by the sharp power-wielders.

Although the New Zealand government has soft-peddled the issue, the GCSB has given three warnings this year about disruption activities undertaken by foreign states that have an impact on New Zealand. This demonstrates what the authoritarians already know: there is often a disjuncture between what elected officials say and what security professionals consider to be of priority concern.

More darkly, sharp power has been deployed with murderous or criminal intent. Be it recent Russian poisoning campaigns against dissidents and renegade intelligence agents in the UK, the murder of a Saudi journalist by state agents in the Saudi consulate in Istanbul, the killing of Kim Jung-un’s half brother in the Kuala Lumpur airport or the physical intimidation of expat Chinese communities in Australia, authoritarians have grown bolder in flouting international norms on sovereignty and non-intervention. Even New Zealand may have been touched by such authoritarian interference: the burglaries of the home and office of an academic critic of the PRC’s foreign influence operations are believed to have likely been carried out at the behest or on behalf of the Chinese state since no valuables were taken while research tools and materials were. New Zealand security authorities have stated that the investigation has moved overseas and been transferred to INTERPOL, the international police agency. That means that the perpetrators are believed to have left New Zealand, something that would be unusual for local common criminals given the low level of the crime and the nature of what was taken.

Let there be no mistake: if they involve a foreign power, the burglaries of Ann Marie Brady’s home and office are crimes committed on sovereign New Zeaaland soil and therefore a step up from influence operations and into direct intimidation of a New Zealand citizen and her family.

The authoritarian moment.

The emergence of authoritarian sharp power as a tool of trade occurs against a backdrop where democracies are in crisis and authoritarianism is on the rise. The crisis of the democratic world, from the US to the UK, Italy, Eastern Europe and beyond, has seen the emergence of rightwing populism as a political alternative based on xenophobia and ethno-centrism. It eschews the values of equality and inclusiveness that are hallmarks of liberal democratic systems. In parallel, be it in Brazil with the rise of Jair Bolsonaro, or the Philippines with Rodrigo Dutarte, or the left populist regimes of Nicolas Maduro and Daniel Ortega in Venezuela and Nicaragua, respectively, to the dozens of autocrats running countries in Africa and Asia, the current global political moment is one where authoritarians are on the rise. This has emboldened despots of all stripes in their approaches to foreign policy and the use of sharp power. Strong authoritarian states like the PRC and Russia have brazenly violated international norms by laying claim to, built islands on and militarily fortified reefs in international waters while ignoring international arbitration decisions against it (China in the South China Sea) or seized and annexed large swathes of a neighbors territory in the face of international condemnation (Russia is Georgia and the Ukraine). The Saudis are leading a vicious war in Yemen against Iranian-backed rebels in which war crimes are committed on industrial scale. Myanmar’s military is engaged in the ethnic cleansing of its Rohinga community, causing a multi-national humanitarian crisis.

These and scores of authoritarian atrocities go unpunished because the liberal democratic world has neither the will or the capabilities to stop them. That is a weakness that authoritarians seek to exploit with their sharp power projection, and in this they may have been encouraged by the US abandonment of its support for the liberal institutional world order under the Trump administration.

The question of response.

The question is how to respond to the use of sharp power against New Zealand? As a small, economically vulnerable state that is dependent on trade in agricultural commodity exports, tourism and foreign student education from a number of authoritarian states, particularly the PRC, New Zealand has to tread delicately when confronting violations of its sovereignty and/or overt or covert meddling in its internal affairs. On the other hand, as a staunch supporter of the rule of law and norm adherence in international affairs as well as a long-term member of the community of mature liberal democracies, New Zealand cannot afford to cast a blind on on such offenses less it encourage more and from other actors as well. In fact, its response has to be both broad and specific, with it coupling repudiation for international norm violations and support for democracy as a matter of principle with specific targeted remedies taken against those who employ sharp power on New Zealand soil or against its interests.

It is a conundrum that will not be resolved easily.

The type of response to sharp power aggression is determined by the nature of the offense committed and the amount of leverage the targeted entity has vis a vis the perpetrators set against the geopolitical context of the moment (for example, retaliating against a relatively weak actor that has the protection of a stronger actor is harder than if the former acted alone and without the cover provided by the latter). Private actors such as firms and NGOs have less resources and range of options when confronting sharp power intrusions (say, via cyber-hacking or reputation-destroying campaigns). Public actors have a wider range of resources and options and depending on circumstance can assist private actors in their responses.

When it comes to inter-state conflicts that do not rise to the level of war, the responses are mostly diplomatic or economic. Sanctions, withdrawal or expulsion of diplomats, curtailment of visa privileges, travel bans, asset seizures–these are just some of the options available to policy makers when responding to hostile employment of sharp power against their state interests. The general rule of specific reply is that it be proportionate, nuanced, focused and effective at deterring future such intrusions.

What remains clear is that the rise of authoritarianism as the dominant political form world-wide has brought with it a concomitant rise on the use of sharp power as a foreign policy tool and strategic weapon. Augmented by the technological breakthroughs in telecommunications over the last decades, the deployment of sharp power is a symptom of the crisis of global democracy as well as a challenge to it. This should be a matter of priority concern to those who believe in transparency and honesty in the conduct of public and corporate affairs, both domestic and international.

36th Parallel Assessments provides public and private decision-makers with advice on how to detect and respond to sharp power interference. Readers are welcome to contact us for a free preliminary consultation.

Director Paul G. Buchanan has been named as a member of the New Zealand Inspector General of Intelligence and Security’s Reference Group, an external interest intermediation panel. The backdrop to his appointment is that historically the IGIS has been a hollow agency posing as an institutional check on the agencies it is statutorily charged to oversee. Historically dependent on the funding, space, communications and cooperation of the NZSIS and GCSB and without powers of proactive compulsion under oath, the office was as much devoid of real authority as it was a reward to individuals for service in other fields. In response to series of scandals and illegal behavior on the part of the NZSIS and GCSB, in recent years the authority and independence of the IGIS have been strengthened. However, these remain some distance away from the type of robust oversight associated with mature liberal democracies, and the Reference Group was created with the intention of expanding the number of interlocutors the IGIS interacts with when confronting the challenges of the job.

In democracies intelligence oversight mechanism vary. In some cases parliamentary or congressional committees exercise strong legal powers to compel intelligence agencies to proactively as well as retrospectively provide evidence or other material documenting their activities under penalties of law. These include institutional as well as individual sanctions, to include fines and jail terms, for those who do not comply. In other cases oversight arrangements are looser and less robust in terms of enforcement capability. Here, should they exist, oversight agencies are often located within the Executive branch and/or the intelligence agencies themselves, leading to a lack of independence and effectiveness when discharging the oversight function. That has been the case in New Zealand, where the IGIS remains as the sole oversight agency (the parliamentary select committee on intelligence and security having no real powers to impose demands on the intelligence community),one that in spite of recent legislative reforms remains relatively weak when it comes to ensuring compliance by the agencies under its jurisdiction. It is against that backdrop that the Reference Group was created.

In response to questions raised about the composition and purpose of the Reference Group, Dr. Buchanan has written an explanatory brief. It follows below.

Source: Wikimedia Commons.

The announcement that the Inspector General of Intelligence and Security (IGIS), Cheryl Gwynn, has convened an external Reference Group to discuss issues of intelligence agency oversight (specifically, that of the NZSIS and GCSB, which are the agencies under her purview) has been met with applause and controversy. The applause stems from the fact the Group is a continuation of her efforts to strengthen the oversight mechanisms governing New Zealand’s two most important intelligence collection and analysis agencies. The controversy is due to some of the persons who have accepted invitations to participate in the Group.

The Group is an unpaid, non-partisan collection of people with interest, expertise and/or background in matters broadly related to intelligence and security and their oversight. None are government employees, something that gives them freedom to speak frankly under the Chatham House rules established by the IGIS. The Group is a supplement to and not a rival of or substitute for the IGIS Advisory Panel, made up of two people with security clearances that have access to classified material and who can offer specific assistance on matters of operational concern. However, the Advisory Panel has had no members since October 2016.

The idea behind the Reference Group, which is modelled on a Dutch intelligence oversight counterpart, is to think laterally or “outside of the box” on matters relevant to intelligence oversight. Bringing together people from different backgrounds and perspectives allows Group discussions to gravitate towards areas of common concern, thereby eliminating personal agendas or extreme positions. And because the Group is made up of outsiders, it does not run the risk of becoming slave to the groupthink of agency insiders.

In contrast to the Advisory Panel, the Reference Group does not handle classified material nor discuss operational matters. Access to classified material or operational details is obviated by the fact that the Group’s focus is on the broad themes of accountability, transparency, organizational compliance and the balance between civil liberties (particularly the right to privacy) and the defense of national security as conducted by the lead intelligence agencies. These are matters of legality and propriety rather than operational conduct. And while similarly important, legality and propriety are not synonymous. Often what is legal is not proper and vice versa, and this is acutely the case when it comes to intelligence collection, analysis and usage. Since the IGIS does not oversea the NZDF and smaller intelligence “shops” such as those of the DPMC, Police, Immigration and Customs, the Group will only discuss issues relevant to oversight of the NZSIS and GCSB.

Who are the members of the Group and why the controversy? The plurality of members are four public interest lawyers, three of them academicians and one an advocate for refugees. Two members are journalists. One is the Issue Manager for Internet NZ, one is the head of the NZ Council for Civil Liberties, one is a former Russian diplomat now serving as the Director of the Massey University Centre for Defense and Strategic Studies (CDSS), one is an economist who chairs Transparency International New Zealand and one is a private sector geopolitical and strategic analysis consultant.

Concern has been voiced about the presence of both journalists as well as the refugee advocate and the loyalties of the former Russian diplomat (although he has held positions at a US security institution as well as the NZDF-funded CDSS. The thrust of the contrary views about these and some of the other participants is that they are untrustworthy due to their personal backgrounds, professional affiliations and/or ideological orientations. An additional reason given for opposing some of the membership is that they have been strong critics of the SIS and GCSB and therefore should be disqualified a priori.

Others believe that the Group is just a whitewashing, window-dressing or co-optation device designed to neuter previous critics by bringing them “into the tent” and subjecting them to “bureaucratic capture” (whereby the logic of the agencies being overseen eventually becomes the logic accepted by the overseers or Reference Group interlocutors).

The best way to allay these concerns is to consider the IGIS Reference Group is as an external focus group akin to a Town Hall meeting convened by policy-makers. Communities are made of people of many persuasions and many viewpoints, and the best way to canvass their opinions on a broad range of subjects is to bring them together in a common forum where they can debate freely the merits of any particular issue. In the case of the Reference Group the issue of intelligence agency oversight and, more specifically, matters of institutional and individual accountability (both horizontal and vertical, that is, vis a vis other government agencies such as the judiciary and parliament, on the one hand, and vis a vis the government and public on the other); transparency within the limits imposed by national security concerns; and the juggling of what is legal and what is proper, are all set against the backdrop of respect for civil liberties inherent in a liberal democracy. These are complex subjects not taken lightly by those involved, all of whom have track records of involvement in the field and who, given the terms of reference and charter of the Group, are acting out of a sense of civic duty rather than for pecuniary or personal gain.

The IGIS does not need political or agency authorisation to construct such a Group, which has no statutory authority or bureaucratic presence. As a vehicle for interest intermediation on the subject of intelligence oversight, it serves as a sounding board not for the IGIS but for the people on it. In that light, the IGIS has called the Group’s discussion a “one-way street” where participants air their informed opinions about agenda items agreed to in advance and in which the IGIS serves as a discussion moderator and takes from it what she finds useful. Expected to meet two or three times a year over tea and coffee, the Group is not likely to tax the Treasury purse and could well deliver value for dollar in any event.

Critics of this exercise and other forms of interest intermediation or external consultation betray their closet authoritarianism because such concertative vehicles are mainstays of policy-making in advanced liberal democracies. Be it the tripartite wage negotiation structures bringing representatives of the State, labour and capital together (even at the regional or local level), to consultative boards and other social partnership vehicles that connect stakeholders and decision-makers in distinct policy areas, the use of interest intermediation is an integral feature of modern democratic regimes (for an example of the breadth of issues addressed by intermediation vehicles, see Kate Nicholls, Mediating Policy: Greece, Ireland and Portugal before the Eurozone Crisis. London: Routledge, 2015.). To argue against them because of who is represented or because they are seen as inefficient talkfests that are a waste of taxpayer money is just a cloak for a desire to silence broad public input and dissenting views in the formulation of public policy. That may have been the case under the previous government but no longer is the case now.

Critics of this exercise and other forms on interest intermediation or external consultation betray their closet authoritarianism because such concertative vehicles are mainstays of policy-making in advanced liberal democracies. Be it the tripartite wage negotiation structures bringing representatives of the State, labour and capital together (even at the regional or local level), to consultative boards and other social partnership vehicles that connect stakeholders and decision-makers in distinct policy areas, the use of interest intermediation is an integral feature of modern democratic regimes. To argue against them as inefficient talkfests that are a waste of taxpayer money is just a cloak for a desire to silence broad public input and dissenting views in the formulation of public policy. That may have been the case under the previous government but no longer is the case now.

One of the thorniest problems in a democracy is the question of what system of checks and balances keeps the intelligence community proper as well as legal. As the most intrusive and sensitive of State activities, intelligence collection, analysis and usage must be free from reproach on a number of grounds—conflicts of interest, partisan bias, foreign control, illicit activity or criminal behaviour, etc.—and must be accountable and responsive to the public will. The broadening of consultation intermediators between the NZ intelligence community and the public is therefore a step in the right direction, and for that reason the Reference Group is a welcome contribution to the oversight authority of the IGIS.

Revelations of Chinese influence operations in Australia and New Zealand, and the ongoing sequels to the Russian “interference” in the 2016 US election, have caused outcry and concern amongst policy-makers and public alike. Beyond the xenophobic aspects to fears of the spectre of a “Yellow Peril” emerging in the Antipodes (a fear that we do not share) aand the Cold War overtones to the response in the US to the Russia allegations, the way in which influence operations, targeted interventions and intelligence gathering differ–and how and when they overlap–is a subject worth considering. In this analytic brief 36th Parallel Assessments delinates what these three types of foreign outreach are and how they interact as legitimate and illegitimate tools of the trade.

Influence Operations.
Influence operations, also known as influence peddling, are normal and legitimate tools of states as well as non-state actors such as private firms, non- and international governmental organizations. They are focused on the old adage “how to win friends and influence people” in pursuit of organizational objectives, be these diplomatic, economic, military or cultural in nature. The purpose is to create a favorable impression of a state, firm or agency in the mind of a target entity, be it the general public or selected subsets of it, particularly key interlocutors (agencies as well as individuals) whose decisions impact on the fortunes of the influencing agent or organization.

Influence operations are the stock and trade of private sector lobbying and government outreach programs in foreign states. They include everything from wining and dining of potential business clients, partners or government decison-makers, providing transportation and accomodation to people of influence, staging cultural and artistic events, contributing to political parties and causes, organizing charities, creating education exchanges, donating goods and services, establishing media outlets and generally doing “favors” or good deeds in a target country, region or economic sector. The goal is to create a favorable impression of the influence peddler on the part of targeted entities and people in order to alter the narrative about the influencer in ways that are positive and profitable for it.

Influence operations are a well established part of foreign policy. Institutions like the Alliance Francaise, various US agencies and institutions like the Fulbright Commission, AID and Peace Corps, cultural promotion and friendship societies funded wholly or in part by foreign governments such as Confucious Institutes or Jewish Councils, business associations like the NZUS Council and American Chambers of Commerce–all of these organizations are in the business of promoting home country interests via various methods of exchange. The provision of developmental aid is another form of influence operation. A good example is China’s “checkbook diplomacy” in the South Pacific, where it provides no-or low-interest developmental loans to island states or gifts infrastructure projects to recipient countries as gestures of goodwill. The list of entities and countries that engage in influence peddling is not limited to powerful states or large business interests, and the cumulative impact of their operations is significant in shaping local perceptions of the international order.

Influence operations are most often overt in nature. However, there are instances when they may be used covertly to good effect. Russian use of social media to influence the tone of US campaign coverage (by among other things, placing political adverts and event invitations on platforms like Twitter and Facebook) is a classic instance of attempting to alter the narrative in order to influence the backdrop and lead-up to the elections. The use of so-called “disinformation campaigns,” in which false news stories are seeded throughout social and mainstream media outlets, is one prominent form of covert influencing (as well as giving birth to the phrase “fake news”).

The limits on influence operations are determined by local statutory and regulatory frameworks governing the domestic behavior of foreign agents. Some countries have relatively loose rules governing the activities of foreign influencers while others adopt more restrictive approaches to what can aand cannot be done by foreign agents on domestic soil. This includes what is acceptable when it comes to permissable monetary rewards, exchanges in kind or other forms of inducements provided by influence peddlers to others. In some South Pacific countries, decision-makers expect to be compensated for their time and interest in an influencer’s pitch regardless of the outcome. However, what is seen as koha or tribute in one context is seen as bribery in others, so influence operators must be keenly aware of where local mores draw the line at what is legal or illegal, legitimate or illegitimate when it comes to exchanges of favors.

Targeted Intervention.
Targeted intervention is a more contentious subject but in reality is just an extension of influence operations. Whereas influence operations focus on “softening up” targeted entities by altering general narratives about the influencer in ways that are more favorable to it, targeted intervention concentrates on securing specific outcomes within a targeted entity. This can be done by placing people in key decision-making positions, planting stories in compliant media or putting money into causes or individuals with the intent of securing a desired outcome in their fields of influence. Targeted interventions are conducted by businesses as well as political actors and state agencies.

Targeted interventions can be done overtly or covertly. Placing people in political parties with the intent of having them elected into office is one example of overt targeted intervention, unless the loyalities or political objectives of the person are disgusied or hidden. Donating to election campaigns is another overt form of intervention. Placing people in targeted businesses or public agencies, or engaging in third party financing of negative (or positive) advertising campaigns, are covert forms of intervention in specific fields of endeavour.

Targeted intervention becomes contentious when it is done by foreign actors, particularly states but to include businesses, in order to advance their agendas vis a vis a a sovereign entity. This has been a subject fo considerable concern in the South Pacific, where commerical interests in extractive industries have been accused of intervening covertly using both coercive as well as financial means to disrupt opposition to their activities and to secure favorable environmental, health and safety regulations from local government in spite of that opposition.

Here again, Russian involvement in the 2016 US elections is illustrative. Russian intelligence is alleged to have hacked into the email servers of the Democratic presidential candidate and Democratic National Committee. Selected emails from these accounts were bundled with fake emails purportedly from the same authors and delivered to the whistle-blowing organization Wikileaks, which promptly published them. These were then picked up by mainstream media outlets in the US and covered extensively in the weeks leading up to the November ballot. The furore over the content of the emails gave ammunition to the Republicans and put the Democratic candidate on the defensive. Although it is unclear to what extent the negative cobverage of the email “scandal” contributed to the Democrat’s defeat, with the margin of victory boiling down to 60,000 votes (out of 130 milliion cast) in two swing states, it is possible that the targted intervention by Russian hackers had a role to play in the outcome.

Even more directly, US intelligence has alleged that the Russians also attempted to tamper with elexctronic balloting in 21 states. These efforts were thwarted by US counter-intelligence measures and led to quiet threats of reprisals, but the larger point is that the attempted manipulation of ballots by the Russians is a clear example of targeted intervention.

To be fair, the US has a long history of targeted interventions in foreign countries, up to an including electoral manipulation and material support for insurrections and coups d’etats. The point here is to stress that many forms of targeted intervention fall far short of these extreme measures and in fact often preclude such extremes from happening.

Intelligence gathering.
Intelligence gathering is the process of acquiring information on targeted entities without their knowledge or consent. This can occur overtly or covertly and is conducted by private agencies as well as governmental organizations and states. The purposes of intelligence gathering are to determine intent, motivation, patterns of behaviour, organizational charcteristics and capabilities, resource bases and Open source intelligence gathering such as that provided by 36th Parallel Assessments uses public records, secondary sources, personal interviews and scholarly analyses to provide indepth appraisals of specific situations. Open source intelligence gathering is also conducted by state intelligence agencies, think tanks, research institutes, and a variety of international, governmental and non-governmental organications. For example, economic and political officers in embassies spend most of their time tasked with drawing up assessments of current events in their host countries.

Covert intelligence collection is the use of surreptitious means to gather sensitive information about target entities. The targets can be military, diplomatic, economic or social in nature (say, family dynamics within dynastic regimes). Covert intelligence takes three main forms: technical intelligence (TECHINT) gathering (e.g. thermal imagery, acoustic, radar and seismic monitoring; signals intelligence (SIGINT) gathering (e.g. phone wiretaps, computer hacking, fiberoptic cable “bugging,” telemetry intercepts, decryption programs); and human intelligence (HUMINT) gathering (where human agents are sent into the field to gain both startegic and tactical insight into the behaviour of targeted entities as well as provide context to them). HUMINT comes in two forms: official cover, where the intelligence agents is provided official protection (“cover”) via embassy or other governmental affiliation formalized in the issuance of a diplomatic passport (thereby granting some level of immunity from criminal prosecution): and non-official cover (NOC), where the intelligent agent operates outside of the protections of diplomatic representation by posing as something other than a government agent, for example, as an academic, business person, charity worker, etc).

Be it overt or covert in nature, intelligence gathering is often conducted in concert with or in support of influence operations and targeted interventions. This is because intelligence gathering hekps identify the best courses of action in any given context, including points of strength and weakeness in targeted entities. The closest overlap is between intelligence collection and covert targeted influence operations, where the former identifies the targets of intervention as well as the best means by which to achieve specific results. Conversely, influence operations tend to be more public in nature and due to their relative exposure to accusations of being potential fronts are often deliberately walled off from intelligence operations.

Conclusion.

Influence operations, targeted interventions and intelligence gathering are tools of statecraft as well as of business engagement with the socio-political and economic environments in which they are located. 36th Parallel Assessments provides clients with the means to detect, deter, ameliorate or conduct influence operations and targeted interventions as well as provide open source geopolitical and market intelligence services in a range of contexts.

]]>Brazil enters the military airlift market, with New Zealand as a target.https://36th-parallel.com/2017/04/12/brazil-enters-the-military-airlift-market-with-new-zealand-as-a-target/
Wed, 12 Apr 2017 02:25:51 +0000http://36th-parallel.com/?p=97295

Photo: Embraer.com

Military aviation has become a global business that transcends strike forces and combat-only platforms. Flexibility in non-military missions such as search and rescue, firefighting and medical evacuation are now added to traditional military airlift missions like troop and weapons transport, airdrop and long-range patrol, surveillance and intelligence gathering. In this analytic brief 36th Parallel Assessments examines the KC390, a new entry from Embraer in the medium airlift market, which is being considered by the Royal New Zealand Air Force as a future generation Air Mobility lift option.

In partnership with the Brazilian Air Force, the Brazilian aerospace giant Embraer has begun development of the KC390, a turbofan (jet) powered, extended range multirole medium airlift platform that expands on Embraer’s Defense and Security range of surveillance, ground attack and training aircraft. The move into military aviation (now 14 percent of Embraer’s global sales) was a natural course for a company that has strong history in civilian aviation, including commercial, corporate and agricultural aircraft. Founded in 1969 and headquartered in Sao Paulo, Embraer has over 19,000 employees and construction, maintenance, parts and service facilities in ten countries, including China and Singapore in the Western Pacific Rim. With over 8000 planes flown by 100 airlines and public and private entities in 90 countries, Embraer is the third largest aircraft manufacturer in the world.

Development of the KC390 is coincident with a critical moment for the Royal New Zealand Air Force. As part of a NZ$20 billion Defense upgrade over the next 15 years, the RNZAF is scheduled to replace its aging airlift capability in the early 2020s under its Future Air Mobility Capability project. The RNZAF capability is a medium lift component that consists of 5 Lockheed Martin C-130 Hercules utility platforms and 2 Boeing 757 transports. Some of the airframes on the C-130s are 50 years old, and both they and the 757s are unable to provide the payload or range requirements for a future independent airlift capability in New Zealand’s primary theater of operations (the South Pacific and Antarctica). Documents attached to the 2016 Defense White Paper speak of a “like-for-like” purchase of newer aircraft, but the RNZAF is particularly interested in procuring planes that carry heavier payloads over longer distances but can still land and takeoff on short unprepared airfields and which are flexible enough to perform a variety of roles including search and rescue, intelligence gathering and surveillance, air drop (paratroopers and pallets) as well as troop, helicopter, armour and general cargo transport. The key values are flexibility, durability, range, payload and cost.

Although the RNZAF as not expressed a preference for a particular platform, frontrunners for the airlift replacement have been widely discussed. These included an upgraded version of the Hercules, the C-130J “Super Hercules,” the Boeing C-17 and the Airbus A400M. Although the C-130J is a “like-for-like” replacement option, both the C-17 and A400M are heavy lift platforms that, while satisfying several of the RNZAF requirements cannot operate from short rough runways and are very expensive (over NZ$250 million each). Boeing has discontinued production of the C-17 so it will have to be purchased second hand, whereas the A400M has just entered service with the Royal Air Force and five other countries after years of delays, cost overruns and a fatal crash during testing. Other options, such as converting well-proven commercial aircraft like the Boeing 777 or Airbus 320 have also been mooted in New Zealand policy circles, but none of these have the multirole flexibility or durability of dedicated military aircraft.

The entrance of the KC390 into the military airlift market fills the gap between the US and European alternatives and RNZAF requirements. Designed as a direct competitor to the C-130J, the KC390 can undertake short takeoff and landings on rough airstrips and flies faster with a greater payload and range than its rival. In addition to the roles outlined by the RNZAF, the KC390 can perform aerial refueling for fixed wing and rotary aircraft, medical evacuation (up to 74 litters and 8 medical personnel), aerial firefighting and, due to its enhanced survivability systems and robust landing gear, tactical combat operations. Because of the greater width, length and height of its cargo bay, the KC390 can carry the New Zealand Defense Forces largest armoured personnel carrier or a helicopter, something that a C-130 cannot do.

Source: https://www.aereo.jor.br/2011/05/07/a-repercussao-do-kc-390/

One essential difference between the KC390 and the RNZAF’s current airlift options is that, because of its wing and fuselage fuel tanks, it has the ability to safely pass the current Point of No Return (PNR) on Antarctic flights and still be able to turn around and return to the New Zealand mainland on a load of fuel while carrying a 14 ton payload (with a maximum payload of 26 tons, five more than the Hercules). This requirement was made very clear in a 2013 near-disaster involving a RNZAF 757 low on fuel flying in bad weather on an Antarctic mission, and has become part of the RNZAF airlift tender specifications. Because it has a rough short field landing and takeoff capability, the KC390 has better options in the event it must make emergency landing on small landmasses (the C130J does not have the range to make a flight to Antarctica without aerial re-fueling). As part of its airworthiness certification the KC 390 has undertaken cold weather crosswind trial flights in Southern Chile as well as refrigerated hanger tests in the US, so the manufacturer has specifically focused on that aspect of the RNNZAF requirements.

Beyond its performance specifications, the KC390 offers good value for money. The export version of the C-130J costs approximately US$120 million. The KC390, which is scheduled to enter service in 2018, costs around US$85 million per unit. The C130J entered into production in the mid 1990 using baseline technologies from the 1960s, whereas the KC390 is a new airframe using state of the art components.

Six countries have ordered 60 copies of the KC390. Argentine, Chilean, Colombian, Portuguese, other European and US suppliers, including Boeing, BAE Systems and Rockwell Collins, contribute to the manufacture of the aircraft. Boeing has a major service contract for the KC390 that extends to on-site servicing in the field. Among other countries, trials are being conducted by Canada and Sweden to ascertain the utility of the KC390 in a variety of roles. In November 2016 Embraer answered a RNZAF Request for Information (RIA) to replace the 5 C-130s with a similar number of KC390s, with a decision on the potential purchase expected in mid to late 2017.

Embraer is committed to extended post-delivery material, fleet, flight, information technology and field services, which means that ongoing employment benefits will be shared throughout the supply, service and maintenance chain. As its first foothold in the Western Pacific military aviation lift market, an RNZAF contract for the KC390 also makes New Zealand a potential hub for Embraer expansion in Australasia.

New Zealand has a history of looking to the US and Europe for its defense needs, but the entrance of Embraer in the military aviation lift market provides it with a wider range of options than in previous procurement cycles, both in terms of platform design and unit costs. Given the Future Air Mobility Capability upgrades outlined as essential for the future performance of the RNZAF in the 2016 Defense White Paper and its addenda, expanding the NZ defense procurement horizon to South America may prove opportune and propitious. If nothing else, the supply chain ripple effect of procuring the KC390 opens a range of high technology value added opportunities previously unknown to potential stakeholders on both sides of the Pacific.

Although all of the platforms under consideration have significant merits and the C-130J is a well-proven platform that is seen as a natural replacement option, the KC390 represents a new type of airlift capability. And whereas banking on tradition is what military ceremony is made of, when it comes to defense procurement, the opportunity costs of contracting non-traditional partners could well be worth reconsidering traditional RNZAF practice. The KC390 offers that possibility.

]]>The Importance of Leadership Analysis.https://36th-parallel.com/2017/02/14/the-importance-of-leadership-analysis/
Tue, 14 Feb 2017 00:12:50 +0000http://36th-parallel.com/?p=94235Leadership analysis is a vital yet under-utilised tool in the field of geopolitical risk assessment and strategic analysis. In this brief we explain why it is important, how it is undertaken and what 36th Parallel Assessments can offer clients in this regard.

Source: Pinterest.com

The election of Donald Trump to the US presidency has revived interest in a core task of intelligence collection: leadership analysis. Leadership analysis involves discerning the personal background, personality traits and character of individuals in key decision-making positions. These are not confined to government leadership roles, and include businesspeople, union bosses, opposition party figures, international and non-governmental organisation officials, guerrilla and terrorist operatives, interest group directors and anyone else who exercises key decision-making roles in areas of policy or social import. These can be private as well as public figures taken individually or as a group, and analysis of them can assume the form of oppositional research (where the target is viewed in adversarial terms and information is gathered in order to cast unfavourable light on it).

At 36th Parallel Assessments does not engage in oppositional research. Instead, we adopt the Western professional intelligence approach to leadership analysis. That approach is both comprehensive and neutral. It involves a holistic examination of the target(s) in order to provide analysis of good, bad and any other traits that may be of interest to the client. That allows clients to make their own assessments of leadership figures depending on their relationship to them.

Leadership analysis involves much more than determining whether an individual or group is “weak” or “strong.” It involves looking at the personal characteristics of and private, political and material motivations of decision-making individuals and/or groups, and in the case of the latter, the relationships between key members of leadership groups. This includes analysis of family history, friendships, education and other formative experiences, social interests (sports, arts etc.), emotive relationships and other potential sources of strength or vulnerability. The idea is to get a good idea of who the client is interested in.

Source: Geopolitical Dynamics.

Leadership analysis involves a target, a subject and an object(ive). The target is the individual or group exercising decision-making authority in a specific context. The subject of the analysis is the context, situation or arena in which the target operates, i.e., the government, industry, or social milieu in which the target’s behaviour influences the substance and process involved in a particular field of endeavour. The object is to get an accurate idea of the motivations of the target and the impact the target has on the subject in order to make informed and beneficial short and medium decisions in areas in which client and target interests overlap or compete.

Independent leadership analysis is particularly important in the fields of diplomatic and government relations, business and trade, and political risk. It allows clients to anticipate predictability or unpredictability of decision-making behaviour, prepare for if not foresee leadership transition scenarios, evaluate emerging leadership contenders, and better understand the benefits and risks of adopting specific approaches to targets given the subject areas in which they and/or the client operate.

36th Parallel Assessments offers comprehensive leadership analysis services. Based on a background in leadership analysis for Western government intelligence agencies, we provide insight into leaders in a variety of contexts and tailor our objective analyses to the specific concerns and requirements of clients (e.g. industry or market intelligence, geopolitical risk, net assessment or futures forecasting). Feel free to inquire about our services using the “Contact Us” link on the masthead.

]]>From failure, opportunity beckons.https://36th-parallel.com/2017/01/25/from-failure-opportunity-beckons/
Tue, 24 Jan 2017 21:24:36 +0000http://36th-parallel.com/?p=93021The Trump administration’s decision to withdraw the Trans-Pacific Partnership Agreement, a multinational trade and investment accord involving eleven Pacific Rim countries other than the US, is seen as a blow to hopes for a freer flow of goods and services in the Asia-Pacific Region. In this analytic brief we look at the potential opportunities presented to the non-US TPPA signatories by the US abrogation.

When President Trump signed the executive order withdrawing the US signature from the Trans Pacific Partnership Agreement (TTPA), he signed the death warrant of that multinational trade deal in its present form. The US was the core member of the TPPA and held the dominant negotiating position within it, so the decade-in-the-making, laboriously undertaken and vexing complex compact that was agreed to by the other eleven signatories is now all but null and void.

There are options, however, for the TPPA that may allow it to survive and thrive in light of Trump’s unilateral abrogation.

First, the other eleven member states can put the agreement into hibernation, wait for the 2020 US presidential election and hope that a more trade-oriented president succeeds Trump.

Second, they can hope that the Republican congressional leadership will force Trump to reverse his decision sometime between now and 2020. That would only occur if Trump is weakened by some failure and the GOP sensed that it could re-assert its traditional pro-trade stance at his expense. The Democrats would welcome the move for opportunistic partisan reasons even if some of its leading figures such as Bernie Sanders also oppose the TPPA and applauded Trump’s decision to pull plug on it.

Third, the members could look to themselves and re-draw an agreement that is less US-centric. Many of the provisions insisted on by the US could be reconsidered and even dropped in exchange for increased preferences for the interests of previously junior TPPA partners.

Fourth, the remaining TPPA partners could look to fill the void left by the US with another large market economy. The one that springs immediately to mind is China. That is where things get interesting, and where opportunity may lie.

China is already party to the ASEAN-China Free Trade Agreement (ACFTA) that established a regional free trade area that is the largest in terms of population and third largest in term of trade volume and nominal GDP. Some of the ACFTA signatories are also parties to the TPPA (Brunei, Malaysia, Singapore, Vietnam). This agreement is considered to be a “true” free trade agreement in the Ricardian sense because it reduces tariffs across 7,881 product categories to zero percent, with the result being that tariffs on ASEAN goods sold to China fell to 0.1 percent and those of China sold in ASEAN to 0.1 percent in the year the agreement went into force (2010)

The non-US TPPA members could opt to negotiate an agreement with ACTFA as one course of action. That may be difficult given that the TPPA is not a “genuine” FTA as much as it is an investor guarantee agreement (IGA) in which market regulations are altered to attract foreign investors and these are protected from legal liability in the event of disputes with the host state. What is not included in the TPPA are across-the-board reductions to zero tariff, and in fact many domestic industries remain protected or subsidised throughout the TPPA membership as part of the horse trading undertaken during negotiations over its central tenets. But it may be possible to reconcile the two trade deals in an effort to create a new super trade bloc on neo-Ricardian grounds.

Another option might be to invite China to the table. It has the second largest market in the world and is continues to grow at a sustained and rapid pace in spite of the vicissitudes of the world economy over the last two decades. It is making the transition from export platform to a mixed domestic mass consumption/value-added export model, and it has previously expressed interest in joining the TPPA. The US blocked consideration of China’s membership because it saw the TPPA as the economic equivalent of the military “pivot to Asia” announced by the Obama administration, that is, as a hedge against Chinese economic, diplomatic and military influence in the Western Pacific Rim in what amounts to a new Containment Policy in the Asia-Pacific.

With the US gone, China has an opening and the remaining TPPA members have an opportunity. The TPPA will have to be renegotiated, but it is likely that the non-negotiable provisions insisted by the US will not be supported by the Chinese and can be dropped in the effort to entice their interest. In turn, China might have to accept something less than blanket reductions in uniform tariffs and agree to a tariff reduction regime that is more segmented and scaled in orientation and gradual and incremental in application (i.e. more product or industry specific and phased in over a longer period of time). That is clearly within the realm of possibility, as is Chinese agreement to other TPPA provisions stripped of their US-centric orientation.

China has already signalled its intentions in this regard. President Xi used this year’s Davos Forum to preach the virtues of free trade and global commerce, arguing against protectionism as an impediment to international understanding and exchange. China has proposed the creation of a Regional Comprehensive Economic Partnership (RCEP) along the lines mentioned above with regard to an ACTFA-TPPA merger but with the provision that the US be excluded. There are many details to be ironed out but the groundwork has been laid for that to happen.

What makes the turn to a China-included trade bloc a potentially win-win proposition for remaining TPPA signatories is that the key provisions demanded by the US–changes in market regulations and preferential market entry clauses for US business interests (including changes in patent and copyright protection) and imposition of limited liability clauses in the event US businesses are sued by local governments–were those that were most resisted by domestic audiences in several TPPA member countries. Removing them not only allows the agreement to be free of those constraints but also diffuses a source of domestic opposition in countries where such things matter.

One thing TPPA states should think carefully about, especially small states like New Zealand, is the invitation to negotiate bi-lateral trade deals with the US instead of the TPPA (something just announced by the Trump administration). The historical record shows that large asymmetries in market size favour the larger over the smaller partner in bilateral trade agreements. This is due to economies of scale, market dominance, and economic and geopolitical influence derived from market size advantages. The recent track record of bilateral deals between the US and smaller states reinforces this fact. Australia, South Korea, Chile, Colombia and the Central American nations plus Dominican Republic grouped in the CAFTA scheme all have bilateral FTAs with the US. In all instances the majority benefits accrued to US-based companies and industries and the benefits accrued in the partner states were limited to specific export markets (mostly in primary goods), with little flow-on, trickle down or developmental effects in the broader national economies.

So rather than “jump on a plane” to sign a bilateral deal with the US, as one wag put it, smaller states such as New Zealand need to think hard whether the bilateral alternative with the US is more long-term beneficial than a multilateral agreement, especially when it has shown that under a certain type of administration the US is willing to renege on its commitments even if they are multilateral rather than bilateral in nature. With the Trump administration also set to review and replace the tripartite North American Free Trade Agreement with Canada and Mexico (NAFTA), it is clear that honoring commitments and maintaining continuity in trade policy is not, even if just for the short term, on the US agenda.

When one widens the lens on what the Trump administration is doing in terms of its threats to withdraw from various bi-and multinational defense agreements unless the partner states “pay more” for US protection, it becomes clear that the US is not, at least for now, a reliable international partner.

The reason is that the new US attitude to trade is part of a larger phenomenon. The neo-isolationist protectionism embedded in the “America First” approach adopted by the Trump administration has ended, however temporarily, over 50 years of bipartisan consensus in the US political elite on the merits of international engagement. Be it in trade, foreign aid or collective defense, the US policy elite, both public and private, have embraced globalisation as a means of projecting US power, influence and values world-wide. That era has come to end for the time being, and so long as Trump is successful in pursing his “America First” strategy it will continue to be so.

That may or may not make America Great Again but it could well have a negative impact on those who seek mutual benefit by engaging with it. They will be asked to do more, pay more and offer more concessions in order to be granted US favour.

In the absence of an alternative, that is an unenviable position to be in.

If alternatives are available, then the current moment in US politics provides a window of opportunity to countries that have found themselves marginalised by Trump’s policy directives.

The re-orientation of TPPA is one such opportunity because, if for no other reason, a US return to the TPPA fold in the post-Trump era will see it with much less leverage than it had up until now. Add to that the possibility of increased benefits via a renegotiated deal with the remaining and possibly new partners, and the downside of the US withdrawal seems acceptable.

From a smaller nation perspective, that is a good thing.

]]>Constitutional Coups.https://36th-parallel.com/2016/09/06/constitutional-coups/
Mon, 05 Sep 2016 20:21:26 +0000http://36th-parallel.com/?p=84025A disturbing development in democratic politics is the emergence of a new form of forced ouster of presidents. Although military-led coups continue to occur, they have increasingly been met with disapproval at home and abroad. In their place have emerged “constitutional coups” whereby impeachment is used as a weapon against executive branch incumbents by disloyal oppositions in the legislature. In this analytic brief 36th Parallel Assessments outlines the phenomenon and its implications.

When people think about coups d’etat, they tend to think about armed interruptions of the constitutional order, usually perpetrated by the military against an elected government. Such was the case with the abortive coup staged by elements of the Turkish military against the government of Recep Erdogan last July. Note that I do not say “democratically” elected governments, as usurpations of the constitutional order can also happen in electoral authoritarian regimes such as that of Hosni Mubarak in Egypt in 2011 (only to be followed by a “full” coup against the subsequently elected Muslim Brotherhood government of Mohamed Morsi in 2013).

The traditional origins of coups as forms of regime change, known as golpes de estado in Spanish, do in fact hark back to military interventions against civilian governments, and that remains its most common form. But another form of coup has emerged, minus the bloodshed and state of emergency so often associated with military-led coups (I say military-led because it is very seldom the case that the armed forces act alone when moving against the government of the day). Rather than an interruption and suspension of the institutional process by military means, it is a usurpation from within the institutional order by constitutional means. Instead of bullets fired by soldiers it is ballots cast by politicians that overturn the will of the people prior to scheduled elections. The insurrectionists belong to and work within the political system. This is what is now known as a constitutional coup. In order to understand this new form of “golpismo” we need to consider two background factors.

First, liberal democracy comes in two forms: presidential and parliamentary systems. Although it is possible that constitutional coups can happen in parliamentary systems (such as the removal of governments by Governor Generals in Pakistan in 1953 and Australia in 1975), they most often happen in presidential systems. By their very nature parliamentary systems have built-in insurance against constitutional coups because there are established means to remove a government, specifically via votes of no-confidence followed by snap elections. The rules governing both the vote and the election may vary from country to country, and there may be a ruckus surrounding such events, but they are an integral part of parliamentary democracy and, some might argue, a much finer tuned aspect of democratic governance than that allowed by its alternative.

Presidential systems provide no such mechanism for the removal of governments prior to their end of term. By definition, any such move constitutes an institutional crisis as the system is based on a separation of executive power from legislative authority. In parliamentary systems the executive (in the form of cabinet) continues to act as a parliamentary faction, to include ministers discharging responsibilities as members of parliament. In presidential systems that is not the case and executive authority can often be confronted by or exercised against legislative majorities (as is currently the case in the US). No matter what the majority in the legislature may wish, it cannot simply call for a vote of no-confidence in the government of the day. In fact, it has no legal basis to do so.

When the legislative and executive branches in presidential systems are locked in impasses or stalemates over any number of potential issues, the resolution mechanism boils down to supermajorities in the former and veto powers in the latter. Ideally, in bicameral legislatures the resolution sequence is usually this: the president introduces or supports a bill submitted for approval by the legislature. The opposition obtains a supermajority against the bill in the lower house, which is vetoed by the president, which is then upheld or overturned by a supermajority in the upper house. In unicameral legislatures the sequence is either one and done or a second legislative supermajority vote is taken after a veto in order to ratify or overturn the veto. Neither of these resolution paths provide a mechanism for the removal of the executive.

This process is cumbersome but offers the benefit of providing space for compromise between the executive and legislature as a bill winds its way through the ratification process. But what about removal of an elected government before its term is up? That is where the second key backdrop factor comes into play: disloyal opposition.

Before we examine the role of disloyal oppositions in constitutional coups, here is a summary of what constitutes loyal and disloyal opposition in a democracy (there is no point in using those terms in authoritarian regimes).

Loyal oppositions are those that, having been defeated in elections or confronted by an opposing party in executive office (remember, the problem is unique to presidential systems), abide by the rules of the political game and wait for the next electoral opportunity to gain executive power. During the meantime they work as much as possible to find areas of compromise so that the machinery of governance can continue to serve the public good (or at least be seen as doing so). Even if token, concessions are exchanged so that consensus on issues of policy can be achieved. Only in the most egregious case of executive misconduct, usually involving criminality or gross negligence, does a loyal opposition begin to contemplate the unthinkable, which comes in the form of impeachment (that is, forcing the resignation of the executive under pressure from the legislature backed by the authority of law enforced by state security agents).

Disloyal oppositions are those that refuse to accept the outcome of elections and/or the legitimacy of a particular government and use their political influence and power to bring down that government by any means short of force. This includes being deliberately obstructionist when it comes to passing legislation, flaunting rules governing acceptable political discourse, manipulating or colluding with media to plant false accusations against incumbents, refusing to authorise budgets and confirm executive appointments, and generally acting in every possible way to stymie government policy initiatives, make it impossible for the executive branch to function effectively within the tripartite, separation of powers framework of constitutional government, and to promote discontent with and distrust of the government and its political supporters.

The classic modern instance of a disloyal opposition was the Christian Democratic led opposition to Salvador Allende’s Unidad Popular government in Chile from 1970-73. The result of that disloyalty is well known.

Not all disloyal opposition need result in full fledged military coups. Instead, they can veer down the path of the constitutional coup. Consider the case of Bill Clinton’s impeachment in 1998-99. In late 1998 the Republican controlled House of Representatives voted to impeach Clinton on two counts of perjury and two counts of obstruction of justice. The charges related to his accounts of the affair he had with White House intern Monica Lewisky, the salacious details of which were vividly spelt out by Independent Counsel Ken Starr (Starr has recently been forced to resign from his position as president and chancellor of Baylor University for his role in covering up sexual assaults on females by football players). Mr. Starr was appointed by the Speaker of the House at the time, Newt Gingrich, he of the three marriages and many affairs (including with subordinates).

In 1999 the Republican controlled Senate held a trial and voted on the charges. Needing a two thirds (67 seat) majority for the impeachment to succeed and with 55 Senators on the Republican side, the impeachment vote failed when 50 voted in favour on the obstruction charge and 45 voted in favour on the perjury charge. Clinton remained in office, albeit significantly hamstrung by his near-miss.

The issue here is that the impeachment was over a private sexual affair, not an act of public malfeasance . It was led by people who themselves had similar skeletons in their closets and who did so in part just to weaken the president even if their efforts to impeach him failed (given media coverage of the story). More specifically, it was not about gross incompetence, criminal behaviour, military mismanagement, or even lying to Congress about any matter of policy. Instead, it was about the president receiving fellatio from and using a cigar as a sex toy on Ms. Lewinsky during trysts in the Oval Office, then trying to cover it up. It is doubtful that the founding fathers, in Article Two (Section Four) of the Constitution, had this in mind when they wrote that impeachment was to be used only in exceptional circumstances involving “treason, bribery or other high crimes and misdemeanours.”

That is a slippery slope. And nowhere is the bottom of that slope more evident than in the recent impeachment of leftist President Dilma Rousseff of Brazil.

Brazil has history with impeachment. In 1992 then president Fernando Collor de Mello resigned after Congress voted in favour of his impeachment on charges of bribery and misappropriation of funds. Similar charges of “budgetary mismanagement” were brought against Ms. Rousseff in 2016 by a Congress dominated by the center-right PMDB, Brazil’s largest party, which has the most seats in Congress (66) and is the one to which her vice president Michel Temer belongs (the coalitional aspects of Brazilian politics are too complex to get into here but suffice it to say that Rousseff was trying to keep her friends and allies close and her enemies closer. That did not work out as planned). By the time the first reports of fiscal irregularities surfaced in 2015, the PMDB-led majority in Congress had gone full-blown disloyal in a context of economic stagnation and assorted crises (Zika, lack of Olympic preparations) and were itching to find a reason to remove Rousseff (who was not anywhere as popular as her Workers Party predecessor Luis Ignacio “Lula” da Silva). The investigation into financial wrongdoing gave them their window of opportunity.

The charges against Rousseff stemmed from “Operation Car Wash” (Operacao Lava Jato) into bribery and corruption involving the state oil monopoly Petrobras, assorted construction firms, politicians, bureaucrats and financial entities. Without going into the details, let’s just say three things: First, corruption is a way of life in Brazil, not just an aspect of how the economic and political elite behave (hence the phrase fazer jeito, or ” a way of doing things” on the sly). Of those legislators demanding her impeachment and who voted against her at the Senate trial, over a dozen are being investigated or have been charged with corruption themselves, including now-president Temer. Included among the luminaries who voted to oust her is a former Army officer who was involved in her torture when she was imprisoned by the military dictatorship in the early 1970s, and who said during the proceedings that it would have been best that she were killed while in custody.

Secondly, creative accounting by Brazilian governments is a time-honoured tradition that crosses party lines. Most reputable political and financial analysts agree that not only was Ms. Rousseff not personally involved or benefitted by dodgy Treasury figures, but that in the scheme of things the book fiddling done by her government was not criminal but in fact par for the course in Brazil. Unfortunately for her, Article 85 of the Brazilian constitution and the Fiscal Responsibility Law specifically prohibit mismanagement and disregard for the federal budget. This was the seldom used rope that Congress hung her with.

Thirdly, no impeachment in Brazil can occur without the tacit assent of the armed forces. Of all the sordid aspects of Rousseff’s impeachment, this is the most sobering one. 30 odd years after they returned to the barracks, Brazil’s military still sees forced removal of elected presidents as a viable option–so long as it does not involve them directly.

This is why what happened in Brazil a week or so ago was a constitutional coup.

Although there have been variations on the theme, impeachment is the weapon of choice for constitutional coup plotters. They may use institutional means, but their intentions are disloyal and their objectives sinister at heart. Their motivations have nothing to do with honesty and transparency in government or defending democracy. Instead, they are about playing the system for tactically opportunistic partisan gain.

Brazil is not the only Latin American country that has witnessed a congressional coup. In 2012 Paraguayan President Fernando Lugo was impeached and removed from office, ostensibly over his mishandling of a land occupation that ended in violence. He was given two hours to prepare his defense and was replaced by his vice president, who sided with the legislative opposition. Subsequent publication of US embassy cables by Wikileaks revealed that as early as 2009 opposition leaders had begun to make plans to use impeachment as a way of removing Lugo from office (Lugo was elected in 2008). They eventually succeeded.

There is a problem with this strategy: more than one can play that game, and learning curves may teach that rather than the exception, the use of impeachment in pursuit of a constitutional coup can become the new norm. That in turn can spur a contagion effect, whereby politicians in other democracies with presidential systems see merit in pursuing similar courses of action. Worse yet, repeated recourse to the constitutional coup as partisan weapon can lead to outright military intervention. At that point the return to tradition trumps any constitutional niceities.

One should take this into account when pondering the activities of political actors in presidential-system liberal democracies, be they big and small. Because in a world where military-led coups are considered particularly thuggish and therefore distasteful, the constitutional coup is the genteel authoritarian’s game.

Summary.

While military-led coups are a clear sign of political instability, a new form of institutional fracture has emerged in the form of constitutional coups. Using impeachment as a tactical instrument, often times backed by key social actors and always with at least tacit military approval, disloyal legislative factions in democracies with presidential systems of governance remove or attempt to remove incumbents of executive positions not for serious crimes or gross mismanagement but for purely partisan reasons. Once this is accomplished in one polity there is a risk that it will be emulated elsewhere. Moreover, once a constitutional coup is successfully orchestrated for reasons other than serious crimes or failures to properly discharge the duties of executive office, the lesson learned by all political actors is that it is a legitimate tool of political competition in presidential democracies. That is a recipe for political instability.

36th Parallel Assessments advises investors and diplomatic missions to closely monitor executive-legislative dynamics in democracies characterised by presidential systems, especially new or immature democracies without histories of political consensus building or compromise. This is due to the fact that while not as dramatic as a military-led coup, constitutional coups can have a similar impact on the material and political fortunes of those on both sides of the confrontation.

The terms “political risk” and “sustainable enterprise” are not often associated. They should be. The degree of sustainability of an enterprise has direct and long- term cultural, economic, social and political ramifications for the communities in which it is located. The less sustainable the business, the higher the political risk. Conversely, the more sustainable the business the lower the degree of political risk associated with it. The calculation for businesses thinking about whether to go one way or the other is one of long term versus immediate gain: whether to maximize short term profit by focusing on immediate gains while ignoring broader non-economic externalities, thereby incurring higher political risk in pursuit of short-term profit, or reduce political risk by pursuing longer-term gains at a restrained and sustainable rate of profit that factors in non-economic externalities.

The reason that political risk increases with unsustainable business practices is because commerce does not occur in a vacuum. If a business violates workers’ civil or labour rights, if it degrades the environment by polluting the air, ground, and/or water, if it dumps rubbish illegally, causes noise, visual or olfactory pollution, allows unsafe working conditions, bribes local politicians or community leaders, fails to pay a fair share of taxes, ignores cultural mores and conventions, then it runs the risk of alienating the people on which it depends for its success. Those people are not elites who may offer short-term benefits for business. They are the community at large in which a firm operates, and that goes well beyond local luminaries and short time horizons.

Cutting corners and playing loose with rules may help maximize short term gains but set the stage for long-term community resentment and failure. Investors may see short-term unsustainable business opportunity as a means of getting in and out of an economic sector while profitability is at its peak, but that leaves subsequent investors, managers and employees holding the bag when it comes to diminishing returns in a climate of hostility towards the business. Such “cowboy capitalism” is therefore not only unsustainable but also counter-productive to longer-term viability of firms and economic sectors.

There is an even more important reason why sustainable enterprise is preferable in terms of political risk: it promotes and reinforces democracy. Democracy, in turn, provides a safer long-term investment climate because it offers a level playing field and universal rules for competitors that are enforced by a politically neutral state bureaucracy and judicial apparatus, unlike the arbitrary and often capricious nature of authoritarian rule.

As a political system democracy rests on self-restraint and compromise by political actors who are held accountable by the electorate and are subject to the rule of law and transparency in decision-making. Rather than a winner-take all system such as dictatorships, democracies seek mutual second best outcomes whereby political actors, knowing that the pursuit of preferred outcomes by everyone leads to conflict, moderate their objectives in search of compromise. This extends to elections, where parties aim to capture the political center by broadening their campaign appeal, losers agree to abide by the results because institutional guarantees are in place that allow them to compete again at regular intervals, and winners agree to subject their rule to voter scrutiny at those times.

Democracy also involves an implicit compromise between workers and business. Workers agree to contribute to business success by being productive in exchange for business treating them fairly in terms of wages and working conditions. The material terms of the exchange are hashed out via collective bargaining in which agents from both sides, acting as equals, seek to emulate the strategic approaches seen in the political sphere. The more this exchange is reproduced throughout the economy, the more stable is the economic system. The more this exchange is reproduced beyond the shop floor and extended into the social division of labour, the more sustainable the investment climate. The combination of economic stability and social sustainability rests at the substantive core of democracy as not only a form of governance, but as a type of community as well.

Source: Tourism Fiji.

Sustainable enterprise is to capitalism what democracy is to politics: both rely on self-limitation, mutual understanding, compromise, long-term orientation and pursuit of the common good as well as self-interest. Exceptions to the rule and the tidal nature of contemporary democratic politics notwithstanding, the maturity of democracy as a form of social organization rests on these foundations.

That is its most important virtue. Sustainable enterprise has the effect of improving the social and economic foundations of democracy in which the bottom line is measured as much in quality of life and the contentment of the community as it is in material gain.

Trouble in paradise.

The situation in the South Pacific is disappointing on both counts. In the last decade, in spite of myriad attempts to promote good governance and sustainable enterprise, the South Pacific has seen the retrenchment of authoritarian politics and the expansion of non-sustainable approaches to commercial opportunity. Throughout the region unsustainable enterprise has been closely linked with corruption, environmental degradation, human exploitation and undemocratic governance. The fishing, forestry, mining and petroleum and gas industries have been most closely associated with these unsavoury traits as well as the use, in some instances, of private militias and/or corrupt local security forces implicated in the assault and murder of activists, unionists and others.

Nickel mine, Santa Isabel Island, Solomon Islands.

They are not alone. Even industries such as tourism have been accused of engaging in corrupt practices in order to circumvent environmental or basic health and safety regulations. The combination of poorly educated populations, self-serving and unaccountable governments (some dominated by “nobility”) and foreign investors unconcerned about or even opposed to business and government transparency and long-term socio-economic and cultural impact are the key ingredients in the witches brew that facilitates continuation of unsustainable business practices throughout the region.

This is of concern because, taken in aggregate it appears that there is a direct link between unsustainable enterprise, corruption and undemocratic governance in the South Pacific. Although this may favour those involved in the short term, the long term legacies of these practices, as has been mentioned, are deleterious on governance, equitable economic progress and quality of life. All of this takes place against a backdrop of accelerated climate change that has the very real potential for creating the first climate refugees coming from inundated Micronesian island states. In fact, given the limited land masses of even the largest Pacific island states, the adverse consequences of unsustainable commerce and undemocratic governance could precipitate environmental-related political instability sooner rather than later. The time horizons for a change towards sustainability are therefore limited.

Papuan campaigner against deforestation, 2008. Source: Greenpeace

This does not mean that there are no glimmers of hope for a reversal of this toxic combination. A variety of agencies, including international, non-governmental and civil society organisations, as well as some foreign governments and private business, have endeavoured to promote sustainable development and good governance practices. The problem resides in that most of the agencies are focused parochially on one or the other rather than on the linkage between sustainability and governance. It is there, as a matter of issue linkage between sustainable enterprise, development and democracy, where the most effort and resources need to be directed.

36th Parallel Assessments stands ready to assist current and potential stakeholders in addressing issues of sustainability and governance in the South Pacific and beyond. Through its research and facilitation services it can offer insight into and potential paths towards the promotion of both.

An earlier version of this essay appeared in sustainnews.co.nz, March 3, 2016.

This essay examines the subject of institutional lag after foreign policy realignment, using as an example the “core “ of the New Zealand intelligence community (the Security Intelligence Service (SIS), Government Communications Security Bureau (GCSB) and National Assessments Bureau (NAB)) after the end of the Cold War. The essay argues that New Zealand intelligence agencies have been slow to adapt to changes brought by the country’s foreign policy realignment in the mid 1990s as well as broader changes in the geopolitical and technological landscape.

The study focuses on the post-Cold War period because modern New Zealand’s intelligence community was born of and deeply influenced by the Cold War, which made the latter’s termination a milestone in the history of New Zealand intelligence community (NZIC). As will be elaborated ahead, how the New Zealand intelligence community responded to the changes wrought by the end of the Cold War and subsequent geopolitical shifts were not necessarily foresighted, seamless or responsive to the actualities of the moment. Instead it reflected the clash between old ways of viewing things, reliance on foreign intelligence partners (and their perspectives), as overlaid on the practical necessities of coping with new technologies, areas of focus, non-traditional threats and changes in foreign policy orientation.

The essay is organized as follows. The first sections explicate the concepts used as foundational stones of the argument. The essay then proceeds to brief case overviews before concluding with an explanation as to why things happened as they did.

Institutional lag.

Institutional lag refers to the time gap between external events or exogenous conditions and institutional (bureaucratic) adjustment or response. There is varying depth to the delay in organizational change given historical and contextual conditions both internal and external to the agencies involved.

Influenced by the work of Thorstein Veblen (1857-1929) on cultural lag, the term “institutional lag” was coined by philosopher and economist Charles Ayers in his Theory of Economic Progress (1944). “Ayres propounded a theory of “institutional lag” whereby technological changes inevitably kept economic technology one step ahead of inherited socio-cultural institutions. The process of Veblenian “evolution” Ayres envisaged was that technological changes were generated by spurts of instinctive inventive activity to innovate in technological processes but that the relatively slow, inherited socio-economic structures would be maladapted to these changes. With glacier-like gradualness, institutions would eventually respond to the new technology, but by the time they adjusted, the next round of inventive activity would have been skipping along further ahead, thus maintaining a permanent lag and thus incongruity between social structures and economic technology.”[1]

Used as a means of explaining the delayed response of firms to technological change in a cycle of perpetual catch-up, the concept has now been expanded to include slow or belated public bureaucracy responses to cultural, socio-economic, political and diplomatic change (as well as technological change). More specifically, policy shifts announced by governments as new initiatives often occur before the public agencies responsible for implementing them have undertaken the organizational reforms required to do so., which necessitates a process of institutional “catch up.”

Delays in bureaucratic responses to shifts in environmental conditions extend to foreign policy and security. This is particularly the case when nation-states have reoriented their international orientation due to external or internal factors (say, as the result of war, alterations in trade regimes or domestic political change). New Zealand’s response to the elimination of British export preferences in the early 1970s and declaration of its non-nuclear status in the mid 1980s are examples of external and internally motivated foreign policy realignment.

Foreign policy realignments can be brought about precipitously or after much deliberation. The former is often reactive to externalities whereas the latter is the product of calculations of longer-term costs and benefits. Either way, the institutional apparatus underpinning the old status quo has to adapt to the change in orientation. Given the inertial weight of institutional history and tradition, it may be something that takes time, especially if confronted with bureaucratic opposition within affected agencies.

Two further syndromes compound the problem of institutional lag following foreign policy realignment. On the one hand there is the issue of institutional rippling, whereby a government opts for realignment but does not involve agencies other than those most immediately and directly affected by and involved in the shift. Whereas the diplomatic corps and foreign affairs bureaucracy are integrally involved in implementing the details of foreign policy realignment, other affected government agencies are slower to follow and often do so in uncoordinated and uneven fashion. This is seen in military and intelligence agencies as well as those such as Customs and Immigration, which are often not fully involved in the decision-making process leading to a foreign policy realignment and yet have to engage organizational reforms in accordance with their own institutional traditions and structures that may not easily follow the dictates of diplomats or the pet projects of politicians.

That brings into play the second syndrome, that of institutional “depth.” Institutional depth refers to the historical legacies of institutional tradition and practice. Some public agencies, such as the police and the military, have long traditions and standards of practice that often date to the days of independence or state foundation. Others, such as agencies involved in the oversight and regulation of information technology and telecommunications, are relatively new to the scene and do not have the accumulated “weight” of institutional mores and practices to deal with when confronting significant change in their operating environments.

Institutional rippling in response to policy realignment often begins with agencies directly involved in the transition and “newer” agencies lacking in relative institutional depth, which are then followed by agencies less directly involved in the realignment decision and/or which have greater institutional depth. The overall effect is that institutional lag becomes a process as well as a distinct organizational phenomenon, with some agencies suffering less institutional lag than others depending on the level of involvement in implementing the realignment and the degree of institutional depth encountered in each.

To summarise: Significant change in a nation’s foreign relations often leads to a process of institutional lag that is determined by the relative institutional depth and degree of involvement of the agencies affected. Front-line agencies such as foreign affairs ministries and recently created agencies with connections to priority aspects of foreign relations may undertake immediate organizational reforms in response to the policy shift, but other agencies, including security and intelligence agencies, may lag behind in reorienting their institutional gaze as well as their internal conformation.

Foreign policy realignment.

Foreign policy realignment refers to a shift in a nation-state’s geopolitical and diplomatic relations. It can be the product of internal factors such as political regime change or an alteration in government perspectives on global affairs, or it can be the consequence of changes in the external environment such as the beginning or termination of conflict, the emergence of new actors, markets or areas of resource contestation, diplomatic shifts by allies or enemies, and more.

Foreign policy realignments may be sudden and/or forced upon states or they may be the product of lengthy deliberation. The end of the Cold War is an example of an external event that produced rather quick foreign policy realignments on the part of many states, while New Zealand’s decision to broaden its trade relations in the mid 1990s is an example of an internally-directed foreign policy realignment that was deliberate and measured in light of systemic changes in the international environment over the previous decade.

Foreign policy realignment does not come easily. Whether they are consulted in advance or not, government agencies must adapt to the change in posture. This can well involve significant and discrete organizational and policy changes as well as alterations in their relationship with private sector and public interest groups, some of which may be resistant to change.

The end of the Cold War illustrates the reality of institutional lag in the wake of foreign policy realignment. Although the international community first shifted from a tight bipolar to a unipolar system, then to a loose multipolar configuration, many defense and security organizations, to include intelligence agencies on both sides of the Berlin Wall, continued to view the world and organize themselves according to Cold War precepts. As this proved inadequate for confronting the new security and intelligence challenges of the 1990s and 2000s, only then did military and intelligence agencies begin to undertake the organizational, doctrinal and perspective changes required in order to do so. This slow and reactive response to changing global externalities was evident in the New Zealand intelligence community.

Issue Linkage.

Issue linkage in international relations refers to the tying together of two or more foreign policy concerns in a “holistic” approach to bilateral and multilateral relations. During the Cold War the most important example of issue linkage was that of trade and security, whereby security partners on both sides of the ideological divide traded preferentially with each other, thereby reinforcing their alliance commitments.

After the Cold War there was a move to uncouple trade and security. This was primarily due to two factors, these being the loosening of security alliances in a unipolar security environment dominated by the United States and the globalization of production, communications and exchange connected by international commodity chains. It was believed that security and trade relations could be uncoupled and dispersed across a wider array of partners, thereby avoiding undue dependence on any one of them (Buchanan and Lin 2006).

They key to success of this new paradigm was to ensure that the new trade and security relationships were not juxtaposed in a contrary or contradictory manner (say, by attempting to trade with a state at war while maintaining security relations with its main antagonist). So long as that did not occur, states were free to loosen the linkages between their trade relations and national security. As shall be discussed below, this was the dilemma posed to New Zealand after its foreign policy realignment in the mid-1990s.

The New Zealand Intelligence Community (NZIC).

This essay focuses on the three “core” intelligence agencies in New Zealand, the Security Intelligence Service (SIS), Government Communications Security Bureau (GCSB) and National Assessments Bureau (NAB, formerly titled the External Assessments Bureau), which is part of the Department of the Prime Minister and Cabinet (DPMC). There are a number of other agencies that serve as intelligence collection and analysis units. This includes the Officials Committee for Domestic and External Security Coordination (ODESC), which coordinates assessments and responses to a wide range of potential threats ranging from natural disasters to cyber warfare. The New Zealand Defense Forces have military intelligence branches in all three services (Army, Navy and Air Force) as well as military intelligence units (Directorate of Defense Intelligence and GEOINT) serving the NZDF as a whole. These agencies, especially the service branch intelligence units, produce tactical intelligence in areas in which the NZDF operates or from where armed threats to New Zealand interests may originate.

Pipitea House, Home of the GCSB, SIS and NAB.

The GCSB is a signals (SIGINT) and technical (TECHINT) intelligence gathering agency that is part of the Anglophone 5 Eyes or Echelon alliance. Its primary focus is foreign intelligence collection but in specific circumstances and increasingly as of late it can undertake domestic SIGINT and TECHINT work in a “partner” role at the behest of other New Zealand government agencies (such as the Police or Customs). The SIS is responsible for domestic intelligence gathering, counter-intelligence operations and foreign human intelligence collection. It also has a “hand in glove” relationship with other New Zealand security agencies when the occasion warrants. The NAB is the ultimate recipient of intelligence streams from all of the NZIC, where it prepares assessments for the Prime Minister within the confines of the DPMC.

The terrorist attacks of 9/11 produced a proliferation of intelligence “cells” in a host of New Zealand public agencies. New Zealand Police, Immigration New Zealand, the Ministry of Business, Innovation and Enterprise, New Zealand Customs Service, and Treasury have their own specialized units. There are also interagency intelligence cells such as the Counter-Terrorism Assessment Group (CTAG), Security and Risk Group (SRG), Intelligence Coordination Group (ICG), and the National Assessments Committee (NAC), with the intelligence from all of these agencies as well as the SIS and GCSB flowing to the NAB, which in turn answers to the Cabinet Strategy Subcommittee on Intelligence and Security (CSSIS). In total, there are 12 intelligence agencies encompassed with the NZIC.

The question is whether the proliferation of these intelligence agencies has increased the accuracy, efficiency and reliability of the information obtained and processed by the New Zealand intelligence community. That raises the issue of how the New Zealand intelligence community sees the world around it, how it frames and assesses threats and how it responds to them. In order to determine this, mention must be made of the research methodology underpinning this analysis.

Methodology.

The focus of this essay is on the SIS, GCSB and NAB because the first two are the lead human and signals/technical intelligence agencies in New Zealand and the latter is the ultimate intelligence assessment and evaluation unit in the country. The perspectives they have on international security matters and New Zealand’s geopolitical context constitute the core of the NZIC’s current assessments and future forecasts of risks and threats. To study what these are, the essay uses the secondary literature dedicated to the theme as well as summary diachronic analysis of the annual reports of the NAB, GCSB and NZSIS (where available), which postulate what are perceived as New Zealand’s most pressing security and intelligence concerns.

The summary analysis is diachronic in that it is both chronological and covers four separate governments: the National government led by Jim Bolger from 1990-1996, the Jenny Shipley-led National/New Zealand First government of 1996-99, the 5th Labour government led by Helen Clark from 1999-2008, and the John Key-led National government of 2008-2015. Viewing core NZIC assessments over time and across governments allows us to determine if there were variations in threat perception under each or if they remained constant regardless of who was in power.

The Bolger Years.

The Bolger government was confronted with significant shifts in its domestic and foreign environment. Domestically, it inherited and was charged with deepening market-oriented economic reforms initiated by its Labour predecessor. Externally, it witnessed the official end of the Cold War.

It focused on the former rather than the latter for two reasons. First, because the transition from the welfare state to a market economy was contested, controversial and polarizing, something that demanded the full attention of policy-makers as they embarked on efforts to “deepen” and institutionalize structural reforms. Secondly, because the collapse of the USSR and its Warsaw Pact allies was not seen as directly or fundamentally altering New Zealand’s (largely pro-NATO) foreign policy orientation, regardless of the tensions between New Zealand, France and the US over the issue of nuclear weapons testing and the presence of nuclear powered and armed warships in the South Pacific.

This had an interesting effect on the two main intelligence agencies. Under the terms of the 5 Eyes/Echelon signals intelligence alliance “reciprocity agreement” that saw it collect information on the Pacific region (and elsewhere when designated) in exchange for global intelligence collected from its larger signals partners, the GCSB basically served as the local storefront for them. It continued to focus its attention on targets of interest mainly to the partners rather than those of New Zealand itself. This included the communications of former Warsaw Pact members as well as Pacific and Eastern Asian nations and Iran in particular, with the emphasis placed on military, political and diplomatic communications. It included (and includes) monitoring of French communications in the Pacific.[2]

It was important for New Zealand to continue to support its Anglophone partners in the 5 Eyes/Echelon signals intelligence network because that was one of, if not the primary method of secure and trustworthy contact after the diplomatic and military fallout from New Zealand’s 1985 decision to adopt a non-nuclear policy (which had the effect of banning nuclear powered and armed vessels from New Zealand waters, which in turn led to the dissolution of the Australia-New Zealand-US (ANZUS) defense alliance). The SIS likewise maintained a special relationship with its Anglophone partners, but given its small size and domestic orientation this was not as crucial to alliance relations as was the reciprocity agreement within 5 Eyes.

However, when the Berlin Wall fell the SIS was left without a mission. Its primary focus was (and is) domestic espionage, and in the Cold War period that meant identifying reds under beds. With that concern removed, the SIS was hard pressed to justify its existence beyond assisting the Police on criminal matters, at least when it came to domestic intelligence gathering and counter-espionage (since the thrust of SIS counter-espionage efforts during the Cold War were directed at Soviet intelligence gathering activities in New Zealand and, in the wake of the Rainbow Warrior bombing by French operatives in Auckland harbor, on French clandestine activities in the South Pacific).

The SIS assigned itself the task of uncovering new domestic threats, and fortuitously for the agency this was provided by the move to market-driven economics. Besides an ongoing interest in criminal enterprise, opponents to the market-oriented policy shift became the new focus of domestic intelligence concern. These came in the form of unionists, environmentalists, human rights, fair trade and social welfare activists, community organisers, Maori separatists, anarchists and other domestic Left activists unconnected to the former Soviet Union and its satellites.

The trouble for both spy agencies was that with the end of the Cold War the ideological conflict between East and West largely died, especially with the adoption of capitalist economics by former communist countries such as the People’s Republic of China and Vietnam. This meant the end of “exporting” revolution by supporting indigenous Left groups, particularly those who advocated armed struggle. As for the French, the arrest, trial and conviction of two French agents over the Rainbow Warrior bombing signaled the downsizing of French intelligence operations in New Zealand in exchange for improved diplomatic relations. The combined result meant that the SIS no longer had foreign-based espionage or subversion to be concerned about when it came to domestic intelligence and counter-intelligence operations.

The result was that threat assessments provided by the (then) EAB focused on domestic actors, regional instability and criminal enterprise. Little emphasis was placed on foreign conflicts further afield and little to no mention was made of terrorism beyond the potential for low-level violence on the part of domestic militants.

The Shipley Government.

The first elected government under MMP, the Jenny Shipley-led National/New Zealand First coalition “deepened” market-oriented policies, the most significant being making trade the centerpiece of foreign policy and developing export markets in Asia, Latin America and the Middle East. This ran in parallel with further opening of the New Zealand market to foreign imports and investment. What this meant in practice was significant foreign policy realignment, arguably one that was built upon and yet more significant than those occasioned by the end of the special trade relationship with the UK and the declaration of nuclear free status.

Foreign policy otherwise ran in concert with the “independent and autonomous” stance favoured by both major parties, with continued emphasis on non-proliferation, disarmament and peacetime military operations (particularly regional conflict resolution, humanitarian assistance, and peace-keeping). But the dye was recast: henceforth New Zealand would put trade at the center of its foreign policy and it no longer would privilege the Anglophone world when it came to commercial relations.

There was no “issue linkage” between the shift in foreign policy and the orientation of the New Zealand intelligence community. Issue linkage is pursued in order to provide coherency in the approach to foreign affairs. The problem for New Zealand was that its intelligence orientation did not match the new trade-based approach to the international system. Instead, it remained focused on pre-existing domestic threats and the external preoccupations of its foreign partners.

The GCSB focus continued to respond to the strategic requirements of its 5 Eyes partners, especially the US and UK. It shared eavesdropping duties in the South Pacific with Australia and traded selected intelligence with France even as it monitored French military and diplomatic communications in the region. Emphasis shifted to include communications in failed, failing and rogue states and those of non-state armed actors. But the mainstay of its eavesdropping and intercepts were focused on South Pacific states, North and Southeast Asia, extra-regional diplomatic communications, international and non-governmental organizations and telemetry from non-5 Eye satellites that disclosed military, particularly naval, communications.

The SIS maintained the focus it had under the preceding government, to include monitoring of anti-status quo ideological activists, Aian criminal organizations, and foreign spy networks operating in New Zealand and the English speaking South Pacific. It’s foreign intelligence collection efforts centered on the South Pacific, specifically focusing on domestic sources of instability and the growing influence of extra-regional actors. Foreign terrorism was not a priority even though it began to impact on New Zealand’s major security partners. All of this was reflected in (then) EAB reports.

The Fifth Labour Government.

The Fifth Labour government headed by Helen Clark looked to be serious about abandoning its Euro- and Anglo-centric view of the world and embracing the notions of trade internationalism, security multilateralism and a diplomatic independence marked by commitment to human rights, non-proliferation and disarmament, regional development in the South Pacific and environmental sustainability. This was evident among other things by its cancellation of a purchase order for F-16 tactical aircraft to replace the aging A4 fleet, which left New Zealand without a combat air wing. It reduced the defense budget across the board and ramped up the trade component of its foreign affairs bureaucracy as it moved to expand and deepen the initiatives begun under the Shipley government.

The NZIC perspective did not change significantly immediately after the Clark government was installed in 1999, although increased attention was given to international disarmament, non-proliferation and support for peace-keeping and military missions other than war. Both the GCSB and SIS continued a priority focus on instability in the South Pacific while tending to the requirements of foreign partners, on the one hand (GCSB) and the necessities of domestic espionage on the other (SIS).

9/11 changed that.

The unconventional attacks by al-Qaeda on New York and Washington DC, precipitated the global “war on terrorism.” The US opted for pre-emptive war on al-Qaeda, saber rattling at the so-called “Axis of Evil” and other rogue states, and started a war of aggression on Iraq. It sent out a call for solidarity and assistance to the international community, and given its traditional ties to the US, New Zealand could not refuse the request. The question for the Clark government was how to do so without betraying the Left wing of the Labour Party and other Left parties in Parliament (especially the Greens). The answer was found in image management and quiet diplomacy.

Security conservatives in the NZDF, MFAT, NAB and DPMC urged the Clark government to use the opportunity to finally repair ties with the US strained since the 1985 non-nuclear declaration. This extended to supporting specialized defense niche businesses based in New Zealand, but was primarily centered on improving bilateral military-to-military and intelligence links with the US as well as strengthening security training and cooperation agreements with Australia, the UK and other Western powers (including France).

For the intelligence community the impact was two-fold. The SIS re-directed its energies towards counter-terrorism, specifically in detecting so-called “home grown” jihadis who might be planning attacks on New Zealand soil as well as those who supported al-Qaeda and other Islamicist extremist groups financially or politically (such as via the use of non-profit organizations as fronts for extremist recruiting or for sending money to al-Qaeda affiliated NGOs). Later, under the Key government, this concern turned to the subject of so-called returning “foreign fighters, that is, New Zealand citizens and permanent residents who left to Middle Eastern war zones and were suspected of trying to return to New Zealand having been radicalized and trained by violent extremist groups like the Islamic State. This tasking extended to monitoring the activities of suspected Islamicists in the English-speaking South Pacific and became the dominant preoccupation of its domestic espionage program.

The problem with the sudden focus on domestic Islamic terrorists was that there were few to be found. This led to some awkward moments, such as when the 2005 SIS annual report claimed that the primary threat to domestic security were “home-grown” jihadis and al-Qaeda supporters, only to have the 2006 report, under a new Director, abandon the claim entirely in favor of foreign espionage on New Zealand soil (Buchanan, 2007). Likewise, there was a brief media frenzy about a New Zealand based plot to bomb targets in Australia to which the government replied cryptically (thereby fueling public speculation about local jihadis), but in the end not a single person was detained, much less charged for Islamicist-inspired terrorist offenses during the entire term of the 5th Labour government, as well as that of its successor.

The SIS continued monitoring of non-Islamic domestic radicals, particularly Marxists, Anarchists, Maori separatists, environmental and animal rights activists. This culminated in the “anti-terrorist” raids of October 15, 2007 where 18 individuals fitting these descriptors (including one with pro-Palestinian sympathies) were arrested on grounds that they were part of an armed criminal conspiracy plotting to commitment politically-motivated violent acts against high profile targets (all terrorism charged were eventually dropped and only four were convicted and sentenced for firearms related charges).

It also increased its counter-espionage activities, as growing numbers of Chinese migrants brought with it a concern about PRC espionage activities in New Zealand. Although the SIS did not name the countries it believed were engaged in foreign espionage in New Zealand, successive annual reports indicate that it remained a primary concern for the duration of the 5th Labour government. One effect of the focus on counter-terrorism and domestic extremism is that the SIS lost some of its ability to engage in South Pacific based human intelligence collection. This was particularly evident in its failure to anticipate the 2006 Fijian coup or the 2009 hardening of the military bureaucratic regime installed by it.

The GCSB also refocused its energies on the terrorist threat, but its role included using its assets in support of and supplying personnel to the US-led wars in Afghanistan and Iraq (Hager, 2011). GCSB involvement in locating, identifying and targeting al-Qaeda and Taliban “high value” individuals in Afghanistan and Pakistan occurred in spite of the government’s claim that New Zealand was only engaged in non-combat roles (a claim that it also used when questioned about New Zealand Defense Force deployments in Afghanistan and more recently Iraq).

The push to show concrete support for the war on Islamicist extremism made for a difficult juxtaposition. By the early 2000s New Zealand was firmly committed to expanding its commercial relations with Asia and the Middle East, yet some of the countries that it was working to establish deeper commercial ties with such as Pakistan and Saudi Arabia were hotbeds of violent Wahhabist and Salafist thought. The contradiction was evident in New Zealand signing bilateral education agreements with Pakistan and Saudi Arabia by which thousands of students from those countries were given visas to pursue university studies in New Zealand without any security vetting.

Moreover, the move to re-establish security ties with the US and its allies in the War on Terrorism brought with it the possibility of alienating Chinese economic and diplomatic interests that saw better New Zealand-US security ties as a threat to China’s growing role as a great Pacific power. Since New Zealand was the first Western country to sign a bilateral trade agreement with the PRC, the reaffirmation of its security relationship with the US placed New Zealand in a particularly awkward diplomatic position vis a vis the two rival powers, one that has a distinct possibility of becoming a “Melian Dilemma.” (Buchanan 2010 b)

The reassertion and extension of New Zealand’s security ties with the US counterbalanced the thrust of New Zealand’s trade-oriented foreign policy realignment away from its traditional sources of patronage and alliance. For the NZIC there was no contradiction inherent in the juxtaposition of an East-focused trade policy and a West-focused security policy and was, in fact, seen as having the best of both worlds (Buchanan 2010a). Even so, there was an increased awareness within the NAB that in spite of claims about New Zealand’s “benign” strategic environment, the country was increasingly exposed to the repercussions of foreign conflicts, something driven home by the deaths of Kiwis on 9/11 and in the 2002 Bali and 2005 London bombings perpetrated by affiliates of al-Qaeda (none of which were foreseen by the NZIC or its major allies). This forced the NZIC to focus priority attention on irregular threats originating or inspired from abroad, to include domestic sources of funding and recruitment for foreign extremism.

The Key Government.

The process of rapprochement between New Zealand and the United States came to fruition with the election of the John Key-led National government in late 2008. Key makes no secret of his affection for the US and was determined to overcome the final barriers to full restoration of bilateral security ties with it.

The task was accomplished with the signing of the Wellington and Washington Declarations in 2010 and 2011 respectively. These restored New Zealand as a first tier military partner of the US. In parallel, after a number of breaches and spy scandals, then the Edward Snowden leaks, the GCSB saw a series of systems and protocol upgrades designed to address the problem of cyber security while increasing its ability to engage in mass surveillance and hacking operations against targets of interest to the US and other 5 Eyes partners.

The GCSB was fully integrated into the 5 Eyes mass data collection schemes as well as providing technical support for US drone operations in the Horn of Africa, Arabian Peninsula, Afghanistan and Pakistan (Hager, 2011). Beyond that its targets include foreign diplomatic and commercial communications, notably those of neighboring Pacific states, diplomatic allies, trade partners, other friendly nations as well as international and non-governmental organizations, interest groups, charities and foreign regulatory agencies.

The SIS continued its attention on counter-terrorism, accentuating its focus on Muslim extremists (including so called foreign fighters and home grown jihadis) while continuing its long-standing interest in Maori separatists, Marxists of various persuasion and anti-free trade groups and individuals. As had occurred under the Fifth Labour government, the heightened concern with counter-terrorism continued to divert resources away from overseas human intelligence operations, particularly within the South Pacific.

One area that continued to grow in importance for the SIS was counter-intelligence operations. These are mainly directed at Chinese espionage, which includes economic as well as military-diplomatic targets. In concert with GCSB efforts to thwart Chinese and other foreign based cyber-espionage and theft, the SIS focus on counter-espionage became the fourth pillar of its institutional orientation (along with counter-terrorism, domestic political espionage and criminal investigations). Added to issues such as fisheries poaching, whaling, arms proliferation and people smuggling, these concerns comprised the bulk of the threat assessment packages delivered to the Prime Minister by the NAB.

In 2010 a reform process was initiated within the NZIC under the banner “one community, many agencies.” The ICG was created and along with the NAB and SRG was re-located in the same building as the GCSB with an eye towards improving information sharing and coordination between them. The SIS was urged to improve its coordination with domestic security agencies and other members of the NZIC in an age of globalized threats. Based on recommendations made in the 2009 Intelligence Agency Review commissioned by the State Services Commission (known as he Murdoch Review), the reforms were driven by the understanding that the NZIC was the product of historical legacies that included adoption of doctrines, precepts, perceptions and policies from foreign intelligence partners that led to a patchwork approach to intelligence gathering and analysis and some “tribal” outlooks on inter-agency dynamics. (Whibley 2014).

Notwithstanding these reform efforts, subsequent reviews of the GCSB and SIS found serious issues with legal compliance, organizational dysfunction and misunderstanding or uncertainty about specific responsibilities within the larger division of labour within the NZIC. Public revelations of these failings led to the creation of the Intelligence Review committee whose review and recommendations will be published in early 2016.

Conclusion.

The New Zealand intelligence community suffered some but not a particularly uncommon degree of institutional lag after the Cold War and the foreign policy realignment of the mid 1990s. Its priorities slowly changed over the 20 plus years that followed the end of the Cold War, but its core areas of interest remained largely unchanged. That was because it did not engage in issue linkage following the foreign policy realignment of the mid 1990s and basically followed the lead of its larger intelligence partners when it came to foreign intelligence priorities and assessments and, at their behest, added terrorism to its list of domestic intelligence priorities. It was slow to react to the threats posed by Islamic extremism and cyber warfare as well as the use of social media for untoward ends, but that was a common problem for all of its intelligence partners prior to 9/11 and the subsequent introduction of “smart” mass communication technologies.

Institutional lag in the New Zealand intelligence community is the product of five factors: over-reliance on foreign intelligence streams for information; subservience to allied intelligence requirements and priorities; limited autonomous signals and human collection capabilities; organizational sclerosis and misplaced focus (on the nature of domestic “threats”). The combination saw the NZIC respond reactively rather than proactively to the emerging threat environment in which it is located.

In addition, institutional lag in the SIS and GCSB appears to derive from three organizational pathologies: bureaucratic insulation, inertia and capture. Both agencies were until recently very insulated from outside scrutiny, to include that of the Ministers responsible for their oversight and direction. This allowed them to conduct their affairs and determine their priorities in relatively unchecked fashion, to include engaging in operations that stretched the boundaries of their legal charters. In part this was due, and in turn contributed to, bureaucratic inertia.

Bureaucratic inertia in the NZIC was characterized by collector bias, organizational complacency, operational redundancy (especially within the GCSB) and resistance to internal and external criticism, administrative change or outside advice. Much of this was rooted in organizational features dating back to the Cold War and recruitment patterns that favored a specific demographic. Until the mid 2000s both agencies were characterized by an “old boys” culture, with limited recruiting outside of pakeha (white European) males, many of who had previous military or police experience.

A partial exception is in the GCSB, which fields a significant number of translators. Because of the requirements for native or near-native fluency, recruitment in the GCSB tends to reflect the listening priorities of its 5 Eyes partners more so than those of New Zealand itself. That includes Farsi speakers as well as those who have command of Mandarin and Korean, which means that the recruitment base for translators extends beyond the traditional pool of European males with military or police experience.

SIS recruitment of Asians and Maori, while ongoing due to concerns about Asian based organized crime and Maori separatists, was expanded post 9/11 to include females and people of Middle Eastern descent. Although females are now a significant component of both the SIS and GCSB (over 30 percent in each agency), Maori, Pacifika and other ethnic minorities remain a very small percentage of these agencies’ staffs (New Zealand Herald, January 3, 2016). The same can be said for the NAB. More importantly, the overall mindset, again until very recently and perhaps extending to this day, was one that emphasized group cohesion and shared perspectives and logics that placed a career premium on “team players” rather than those who might challenge the status quo or rock the boat. Given the very small size of the NZIC (approximately 600 people, of which 500 work in the GCSB and SIS) this mitigated against substantive reform within it.

This organizational culture would not matter, or may not have been allowed to persist, had there been effective oversight of these agencies. But the contrary occurred (and still occurs). Rather than having Ministers and independent oversight agencies such as the Inspector General of Intelligence and Security (IGIS) of and Parliamentary Committee on Intelligence and Security (PCIS) effectively acting as overseers of the agencies that provided a check on their activities, the reverse occurred: ministers, IGs and parliamentary committees were essentially “captured” by the logic and expertise of the intelligence managers who ostensibly reported to them.

Given the limited scope of authority and powers made available to IGs and the PCIS (which excluded them from scrutinizing operational matters, among other things), this left them at the mercy of senior intelligence officials for information about agency activities. With such emasculated oversight that provided no counter-weight to what the agencies claimed to be in the legitimate national security interest, the ministers responsible for them (until this year the Prime Minister acting as Minister of Intelligence and Security) were left to their own devices when it came to critically evaluating intelligence assessments and operations (when they were aware of them). Again, this led to their bureaucratic “capture” by their senior intelligence managers and advisors, with Ministers having to take more on faith than knowledge that what the IC was doing was in fact legal, timely when it came to emerging threats and in the national security interest. This was as true for the NAB and other intelligence consumers within the government at large.

In practice the quid pro quo for government acceptance of bureaucratic capture by the IC appears to be the supply by the latter (specifically the SIS and GCSB) of politically sensitive domestic intelligence for partisan use by the government of the day. Again, until very recently in light of the Snowden revelations and Kim Dotcom scandal, both major parties seemed confortable with that arrangement, although recent evidence suggests that the Key government was particularly adept at using intelligence agencies for partisan purposes (Hager, 2014).

The combination of external dependency and internal conformity contributed the most to the NZIC’s institutional lag. Added to that was the significant depth of organizational culture and practice within the SIS and GCSB, which was resistance to change even after the 2010 reforms and which focused on either debatable domestic threats or the external concerns of New Zealand’s main intelligence partners.

This ran counter to the thrust of New Zealand’s mid 1990s foreign policy realignment, particularly with regard to its relations with China and a variety of Central Asian and Middle Eastern nations. That has left New Zealand in the unenviable position of straddling the fence when it comes to its trade and security orientation and partners, something that is arguably untenable over the long term given the divergence interests of and growing strategic competition between the larger partners (Buchanan 2010b).

2016 represents a potential watershed moment for the NZIC. An Intelligence Review will be published that is anticipated will recommend legal and organizational changes to the SIS, GCSB and perhaps other members of the NZIC. Two female lawyers now head the SIS and GCSB, and their tenures have been marked by more transparency and critical self-reflection than in previous eras. Efforts to broaden the recruitment base for the NZIC are underway within the limits of what secrecy and security allow.

It remains to be seen if any changes are made to the PCIS and the relationship between it and the NZIC, as well as that between the Minister of Intelligence and Security, the Commissioner of Security Warrants, IGIS and the agencies they oversee. They key to improving oversight and quality control mechanisms is to make them proactive as well as reactive in their scrutiny of agency operations and to give them powers of compulsion under oath (Buchanan 2014). Some measures have been taken in this regard with respect to the authority of the IGIS, but oversight currently remains thin at best.

The primary solution to the problem of institutional lag within the NZIC is to develop more autonomous priorities and capabilities. Although doing so in the context of the 5 Eyes system is difficult given alliance commitments, it is not impossible to add a New Zealand centric focus to signals and technical intelligence targeting that does not interfere with ongoing alliance priorities. Even more so, the SIS has the opportunity to redefine its role in a way that is more in line with its relatively limited capabilities, for example, by divesting itself of domestic espionage duties (to the Police) in order to concentrate on foreign human intelligence and counter-intelligence work.

For all the good intent of the 2010 reforms and proliferation of intelligence agencies and cells through government departments, it remains unclear if the intelligence gathering, analysis and assessment process in New Zealand has improved or been streamlined to the point of increased efficiency and accuracy of intelligence products. The 2016 Intelligence Review may help shed light on whether that is the case.

One thing is certain. If the NZIC is going to confront the security challenges of the 21st century it will have to continue to adapt and reform. Only by doing so can it overcome the problem of institutional lag and the contradictions inherent in issue de-linkage. Because being small and distant is not a secure barrier to global threats, and be they foreign or domestic, the threat environment in New Zealand is constantly evolving and posing new challenges to those entrusted with its safe-keeping.

[2] The French Pacific Fleet is headquartered in Papeete and the French Pacific Army is headquartered in Noumea. Concern with French nuclear testing and instability in former French territories drove New Zealand’s interest in them.

Hunt, Graham (2007). Spies and Revolutionaries: A History of New Zealand Subversion. Auckland: Reed Publishing.

Patman, Robert G. and Laura Southgate (2015). “National security and surveillance: the public impact of the GCSB Amendment Bill and the Snowden revelations in New Zealand,” Intelligence and National Security, V.30 (Online version published 20 October 2015).

Last week Fiji took delivery of a shipment of Russian weapons that were “donated” by Russia pursuant to a bilateral Memorandum of Understanding (MOU) signed in February 2015. The Fijians say that the weapons are needed by Fijian peacekeepers in places like the Middle East because what they currently have in their inventory are obsolete. The shipment includes small arms (squad) weapons, two trucks, tear gas, other non-lethal munitions and possibly a helicopter. The shipment will formally be unveiled in February in front of a Russian delegation that will include military trainers who will remain in Fiji to instruct Republic of Fiji Military Forces (RFMF) personnel in their proper usage.

Fijian opposition figures believe that the shipment is illegal because it was not approved by Parliament and that it could be used against domestic opponents of the current, military-backed government. Let me briefly outline the issues.

The shipment is perfectly legal as it is not part of a Treaty that needs parliamentary ratification. Plus, it is a “donation” of military aid so it does not need parliamentary approval.

It is not clear that the formal unveiling will reveal all of the weapons delivered. It is quite possible that some or most of the shipment will be concealed.

The opposition is correct to be concerned about the”dual use” potential of the weapons. Squad weapons, tear gas and non-lethal munitions can be used in peacekeeping but can also be used as instruments of crowd control at home. Given the Fijian Defence Forces history, that is a very real possibility.

The arms shipment could trigger an arms race with Tonga, which also has a military and is a rival of Fiji. The Tongans are not likely to view the shipment kindly even if it does not specifically include naval equipment. Squad weapons can and are used by navies as a matter of routine.

Although Fijian military inventories may well be obsolete, most UN peacekeeping missions are armed by the UN using NATO-standard equipment. That includes small arms and troop carriers used in “blue helmet” operations. Thus the claim that the Russian arms are needed for peacekeeping is debatable at best.

The MOU with Russia also outlines military educational exchanges. These follow on a similar program with the Chinese military (PLA). The Chinese also have funded and undertaken numerous infrastructure projects such as port dredging and road building that have a parallel “dual use” potential: they can be used for civilian and military purposes alike.

Given the above, it is reasonable to speculate that the Chinese and/or Russians may receive forward basing rights in Fiji in the not to distant future. Under the “Looking North” policy Fiji has clearly pivoted away from its traditional Western patrons (Australia, NZ and the US) and towards others that are less concerned about the status of Fijian democracy. Given these weapons transfers plus the bilateral military education and training exercises established with China and Russia, the path is cleared for the two countries to use Fiji as a means of projecting (especially maritime) power in the South Pacific. The Chinese are already doing so, with Chinese naval ships doing regular ports of call in Suva. After years of neglect, the Russian Pacific fleet has resumed long-range patrols. So the stage is set for a deepening of military ties with a basing agreement for one or both.

PLAN hospital vessel “Peace Ark” during 2014 port of call in Suva.

Chinese and Russian bilateral relations are the best they have been in decades. it is therefore possible that they may be working in coordinated, cooperative or complementary fashion when it comes to their overtures to the Fijians. Both seek tourism opportunities as well as preferential access to fisheries in and around Fijian territorial waters, so their non-military interests converge in that regard, which may limit the regional competition between them.

It is clear that post-election Fiji has moved from a “guarded” democracy in which the military acts as a check on civilian government to a soft authoritarian regime in which the executive branch supersedes and subordinates the legislature and judiciary. Some of this is by constitutional design (since the military bureaucratic regime dictated the current constitution prior to the 2014 elections), while other aspects of the slide back towards dictatorship are de facto rather than de jure (such as the speakers’ order to reduce the amount of days parliament can sit. The speaker is a member of the ruling party yet holds a position that is supposed to be apolitical). Then there are the strict restrictions of press freedom and freedom on political participation to consider. Attacks on the Methodist Church, arrests of civil society activists and claims of coup plotting by expats and local associates contribute to concerns about the state of governmental affairs. Add to that the fact that the first Police Commissioner after the election resigned after military interference in his investigation of police officers implicated in torture during the dictatorship, and then was replaced by a military officer (against constitutional guarantees of police and military independence) while the policemen were given military commissions (which insulated them from prosecution thanks to provisions in the 2014 constitution), and one gets the sense that Fiji is now a democracy in name only.

All in all, the outlook is twofold, with one trend a continuation and the other one new. Fiji is once again becoming authoritarian in governance, this time under electoral guise and a facade of constitutionalism. In parallel it has decisively turned away from the West when it comes to its diplomatic and military alignments. This turn is a direct result of the failed sanctions regime imposed on Fiji after the 2006 coup, which was too porous and too shallow to have the impact on Fiji that was hoped for at the time of imposition. The result is a greatly diminished diplomatic influence and leverage on the part of Australia, New Zealand and (to a lesser extent) the US and the rise of China, India and Russia as Fiji’s major diplomatic interlocutors. Factor in Fiji’s disdain for the Pacific Island Forum (PIF) and its continued attempt to fashion the Melanesian Spearhead Group (MSG) as a counter to it, and the makings of a regional transitional moment are clear.

The sum result of this is that the strategic balance in the South Pacific is clearly in flux. Given the US “pivot” to Asia and the reassertion of its security ties with Australia and New Zealand, that is bound to result in increased diplomatic tensions and gamesmanship in the Western Pacific in the years to come.

Much has been written about the relationship between democracy and economic development or, conversely, certain types of authoritarian regime and market-oriented reforms. In this 36th Parallel Assessments Occasional Paper, Research Associate Dr. Kate Nicholls and Director Paul G. Buchanan compare and contrast market-oriented economic reforms in Chile and New Zealand. The first began under a military-bureuacratic regime and was “deepened” by its social democratic successor; the second occurred under a democratic regime governed by a Centre Left Party and later “deepened” by a Centre Right Party. The political and economic developmental parallels and contrasts between the two Southern Hemisphere models are worth noting.

The Paper outlines a theoretical and conceptual framework for evaluating such changes and their relationship to the state of democracy in both countries, then offers some tentative conclusions based on case analysis of specific policy areas in each.

Kate Nicholls (Ph.D., Notre Dame) is a Research Associate at 36th Parallel Assessments and Senior Lecturer in Social Sciences at the Auckland University of Technology. She specialises in comparative political economy and issues of democratic governance.

Paul G. Buchanan (Ph.D. Chicago) is the Director of 36th Parallel Assessments. He specialises in comparative regime dynamics, international security, political risk analysis and strategic thought.

This analytic brief is derived from an ongoing study of South Pacific intelligence communities. There are numerous facets to the study, one of which is intelligence alliances and networks. The brief highlights three undervalued concepts in foreign policy practice and offers some general observations about why Western intelligence agencies reacted belatedly to the changing threat landscape that followed the end of the Cold War.

Introduction.

This essay examines three undervalued concepts in the practice of foreign policy and ties them together in a casual argument. It looks at the subject of institutional lag after foreign policy realignment occasioned by the uncoupling of security and trade, particularly as it is manifest in the Western intelligence community. The essay notes that Western intelligence agencies were slow to adapt to changes brought by post Cold War foreign policy realignments as well as broader changes in the geopolitical and technological landscape. That led them to misread or ignore threats and security concerns in light of the new stance while focusing on outdated security concepts or employing no longer relevant threat assessments. The characteristics and causes of this are outlined herein.

The brief focuses on the post-Cold War period because the Western intelligence community was deeply influenced by the Cold War, which made the latter’s termination a milestone moment in the history of intelligence. How the Western intelligence community responded to the changes wrought by the end of the Cold War and subsequent geopolitical shifts such as those occasioned by the 9-11 attacks was not necessarily foresighted, seamless or responsive to the actualities of the moment. Instead it reflected the clash between old ways of doing and seeing things and the practical necessities of coping with new technologies, areas of focus, non-traditional threats and changes in foreign policy orientation.

Institutional lag.

Institutional lag refers to the time gap between external events or exogenous conditions and bureaucratic or institutional adjustment or response.

Influenced by the work of Thorstein Veblen (1857-1929) on cultural lag, the term “institutional lag” was coined by philosopher and economist Charles Ayers in his Theory of Economic Progress (1944). “Ayres propounded a theory of “institutional lag” whereby technological changes inevitably kept economic technology one step ahead of inherited socio-cultural institutions. The process of Veblenian “evolution” Ayres envisaged was that technological changes were generated by spurts of instinctive inventive activity to innovate in technological processes but that the relatively slow, inherited socio-economic structures would be maladapted to these changes. With glacier-like gradualness, institutions would eventually respond to the new technology, but by the time they adjusted, the next round of inventive activity would have been skipping along further ahead, thus maintaining a permanent lag and thus incongruity between social structures and economic technology.” (Anonymous correspondent Phillip H. quoted in Charles Hugh Smith, Institutional Darwinism: Adapt or Perish, www.oftwominds.com, February 18, 2010).

Used as a means of explaining the delayed response of firms to technological change in a cycle of perpetual catch-up, the concept has now been expanded to include slow or belated public bureaucracy responses to cultural, socio-economic, political and diplomatic change (as well as technological change).

For example, policy shifts announced by governments as new initiatives often occur before the public agencies responsible for implementing them have undertaken the organizational reforms required to do so. When New Zealand began to promote itself as a destination for foreign students studying English and other subjects in the 1990s, it proceeded without having first put into place standards of practice and codes of fiscal responsibility for education providers as well as the monitoring and compliance mechanisms associated with them. This led to the proliferation of fraudulent language schools, forced employment of students by dubious education providers and the short-changing of students by host families with regards to room and board. It was only after these abuses were made public that the Ministry of Education introduced a regulatory framework governing the international student industry (and even to this day there is no systematic security vetting or credential validation of prospective international students—the Ministry of Education must rely on the bonafides supplied by the student and/or the authorities of the their country of origin).

Delays in bureaucratic responses to shifts in environmental conditions extend to foreign policy and security. This is particularly the case when nation-states have reoriented their international orientation due to external or internal factors (say, as the result of war, alterations in trade regimes or domestic political change). New Zealand’s response to the elimination of British export preferences in the early 1970s and declaration of its non-nuclear status in the mid 1980s are examples of external and internally motivated foreign policy realignment.

Foreign policy realignments are milestone events that can be brought about precipitously or after much deliberation. The former is often reactive to externalities whereas the latter is the product of cost/benefit calculations. Either way, the institutional apparatus underpinning the old status quo has to adapt to the change in orientation. Given the inertial weight of institutional history and tradition, that may be something that takes time, especially if confronted with bureaucratic opposition within affected agencies.

Two further syndromes compound the problem of institutional lag following foreign policy realignment. On the one hand there is the issue of institutional rippling, whereby a government opts for realignment but does not involve agencies other than those most immediately and directly affected by and involved in the shift. Whereas the diplomatic corps and foreign affairs bureaucracy are integrally involved in implementing the details of foreign policy realignment, other government agencies are slower to follow and often do so in uncoordinated and uneven fashion. This is seen in military-security agencies as well as those such as Customs and Immigration, which are often not fully involved in the decision-making process leading to a foreign policy realignment and yet have to engage organizational reforms in accordance with their own institutional traditions and structures that may not easily follow the dictates of diplomats or the pet projects of politicians.

That brings into play the second syndrome, that of institutional “depth.” Institutional depth refers to the historical legacies of institutional tradition and practice. Some public agencies, such as the police and the military, have long traditions and standards of practice that often date to the days of independence or state foundation. Others, such as agencies involved in the oversight and regulation of information technology and telecommunications, are relatively new to the scene and do not have the accumulated “weight” of institutional mores and practices to deal with when confronting significant change in their operating environments.

Institutional rippling in response to policy realignment often begins with agencies directly involved in the transition and “newer” agencies lacking in relative institutional depth, which are then followed by agencies with greater institutional depth. The overall effect is that institutional lag becomes a process as well as a distinct organizational phenomenon, with some agencies suffering less institutional lag than others depending on the level of involvement in implementing the realignment and the degree of institutional depth encountered in each.

In sum: Significant change in a nation’s foreign relations often leads to a process of institutional lag that is determined by the relative institutional depth of the agencies involved. Front-line agencies such as foreign affairs ministries and recently created agencies with connections to priority aspects of foreign relations may undertake immediate organizational reforms in response to the policy shift, but other agencies, including security and intelligence agencies, may lag behind in reorienting their institutional gaze as well as their internal conformation.

Foreign policy realignment.

Foreign policy realignment refers to a shift in a nation-state’s geopolitical and diplomatic relations. It can be the product of internal factors such as political regime change or an alteration in government perspectives on global affairs, or it can be the consequence of changes in the external environment such as the beginning or termination of conflict, the emergence of new actors, markets or areas of resource contestation, diplomatic shifts by allies or enemies, and more.

Foreign policy realignments may be sudden and/or forced upon states or they may be the product of lengthy deliberation. The end of the Cold War is an example of an external event that produced rather quick foreign policy realignments on the part of many states, while New Zealand’s decision to broaden its trade relations in the mid 1990s is an example of an internal catalyst for realignment that was deliberate and measured in light of systemic changes in the international environment over the previous decade.

Foreign policy realignment is not something that comes effortlessly or easily. Whether they are consulted in advance or not, government agencies must adapt to the change in posture. This can well involve significant organizational and discrete policy changes as well as alterations in their relationship with private sector and public interest groups, some of which may be resistant to change.

The end of the Cold War illustrates the reality of institutional lag in the wake of foreign policy realignment. Although the international community shifted from a tight bipolar to a unipolar system, many defense and security organizations, to include intelligence agencies on both sides of the Berlin Wall, continued to view the world and organize themselves according to Cold War precepts. As this proved inadequate for confronting the new security and intelligence challenges of the 1990s, only then did military and intelligence agencies begin to undertake the organizational, doctrinal and perspective changes required in order to do so.

The train has left.

Issue Linkage.

Issue linkage in international relations refers to the tying together of two or more foreign policy concerns in a “holistic” approach to bilateral and multilateral relations. Although there are many issues that can be linked, such as human rights and arms sales, here the focus is on trade and security. This was the dominant foreign policy linkage of the Cold War, whereby security partners on both sides of the ideological divide traded preferentially with each other, thereby reinforcing their alliance commitments.

After the Cold War there was a move to uncouple trade and security. This was primarily due to two factors, these being the loosening of security alliances in a unipolar security environment dominated by the United States and the globalization of production, communications and exchange connected by international commodity chains. It was believed that both security and trade relations could be de-concentrated and dispersed across a wider array of partners, thereby avoiding undue dependence on any one of them. They key to the success of this new paradigm was to ensure that the new trade and security relationships were not juxtaposed in a contrary or contradictory manner (say, by attempting to trade with a belligerent while maintaining security relations with its main antagonist). So long as that did not occur, states were free to loosen the linkages between their trade relations and national security.

Issue linkage and issue uncoupling are types of foreign policy (re)alignment, and it is here where the problem of institutional lag often becomes evident in the intelligence community. That is because intelligence agencies that had previously viewed the world through the “holistic” prism of linked security and trade often have a difficult time adjusting to the new realities of their uncoupling, particularly when trade and security relations become juxtaposed in contrary or contradictory fashion.

Causes.

There is a chain of causality at play here. The independent variable is the decision to engage in a foreign policy realignment. The intervening variable is issue linkage or uncoupling. The dependent variable is institutional lag. In layman’s terms, the issue is thus: Regardless of whether it is precipitated by internal or external factors, or is sudden or slow, foreign policy realignment shifts the state’s international orientation. The decision to realign foreign policy is filtered and mediated by the types of linkages between two or more discrete foreign policy areas, which in turn influences whether and how institutional lag occurs in the agencies responsible for implementing policy in those areas.

Where it has occurred, institutional lag in Western intelligence communities after foreign policy realignment is the product of four general factors: over-reliance on allied intelligence streams for information; subservience to allied intelligence requirements and priorities; limited autonomous signals and human collection capabilities; and misplaced focus. The combination saw the majority of the Western intelligence community respond reactively rather than proactively to the emerging threat environment that followed the end of the Cold War.

Institutional lag also appears to derive from three organisational pathologies that are particularly evident in the intelligence community: bureaucratic insulation, inertia and capture. Intelligence agencies were until recently very insulated from outside scrutiny, to include that of the elected officials responsible for their oversight and direction. This allowed them to conduct their affairs and determine their priorities in a relatively unchecked and unaccountable way, to include engaging in operations that stretched the boundaries of their legal charters.

In part this was due, and in turn contributed to, bureaucratic inertia. That is a situation characterized by organizational complacency and resistance to change or outside advice. Much of this was rooted in Cold War recruitment patterns and institutional perspectives that favored a specific demographic status quo within intelligence agencies and a particular strategic perspective within them. But it was also seen in an adherence to institutional tradition, culture, processes and procedures. The overall mindset was one that emphasized group cohesion and shared perspectives and logics that placed a career premium on “team players” rather than those who might challenge the received wisdom of the status quo.

Conclusion.

The combination of external dependency, limited capability and internal conformity contributed the most to institutional lag within Western intelligence agencies after the Cold War. Added to that was the significant depth of organizational culture and practice within these agencies, one that was resistant to change and focused on either domestic threats or the external concerns of allied intelligence partners as much if not more than their own.

The end result is that Western intelligence agencies were slow to react to the looming theat on non-state irregular extremist warfare, and when they did they so in over-reactive fashion to what is, regardless of the atrocities committed, not an existential threat to any liberal democracy. Likewise, they were technologically ill-prepared and organisationally ill disposed to see the threat of cyber warfare until it was well advanced. The result was a game of catch-up during the early 2000s when it came to marshalling resources against irregular and cyber threats, a process that is ongoing.

News that Chinese hackers obtained personal details of 4 million US federal employees dating to 1985, following on the heels of similar attacks on the customer records of private insurance companies and retirement funds as well as the internal email networks of the US State Department and White House, demonstrate that a guerrilla cyber-war is underway. Although it will not replace traditional warfare any time soon, this is the new face of war for several reasons.

First, it does not involve physical conflict using kinetic weapons, which removes direct bloodletting from the equation. Second, it can target critical infrastructure (power grids, water supplies) as well as the command, control, communications, computing and intelligence (C4I) capabilities of adversaries. Third, it can be masked so that perpetrators can claim a measure of plausible deniability or at least intellectual distance from the action. Fourth, it can be used for tactical and strategic purposes and the pursuit of short or long-term objectives.

Much like military drones, cyberwar is here to stay.

The war is not one sided: Russian hackers have penetrated Pentagon email networks and the 5 Eyes signals intelligence alliance has dedicated hacking cells working 24/7 on targets of opportunity. Many other nations also indulge in the practice as far as their technological capabilities allow them. To these can be added a host of non-state actors—Wikileaks, Anonymous, ISIS, among others—who have also developed the capability to engage in electronic espionage, sabotage, data capture and theft.

With the most recent revelations about the hacks on the US Office of Personnel Management (OPM) archival records (which include personal details of active and retired federal employees as well as identities of those who have had or hold security clearances, perhaps including myself given my prior employment by the Department of Defense) an evolution in cyber warfare is now evident.

Previously, most state-sanctioned cyber attacks were so-called “front door” attacks on government or corporate mainframes, servers and networks. The interest was in surreptitiously obtaining sensitive data or installing surveillance devices in order to engage in ongoing monitoring of targeted entities. “Back door” probes and attacks were the province of non-state actors, especially criminal organisations, seeking to obtain private information of individuals and groups for fraudulent use. However, the recent attacks have been of the “back door” variety yet purportedly state sanctioned, and the Snowden leaks have revealed that 5 Eyes targets the personal communications of government officials, diplomats, military officials and corporate managers as a matter of course.

The move to state-sponsored “back door” hacks is ominous. Accessing data about current and retired government employees can be used to blackmail those suffering personal liabilities (debt, infidelity) in order to obtain sensitive information about government processes, procedures, protocols and policy. It can target active and former intelligence and military officials and others with access to classified information. It can target former public officials that have moved to the private sector, particularly in fields of strategic or commercial importance. Likewise, obtaining sensitive personal data of employees working in private firms opens the door to similar exploitation for illicit commercial gain.

Advances in consumer telecommunications have made cyber hacking easier. Smart phones and their applications are considered to be the most vulnerable to hacking. Because many people store an enormous amount of personal data on these devices, and because they often mix work and personal business on them, they represent an enticing entry point when targeted. Yet even knowing this millions of consumers continue to pack their lives into electronic devices, treating them more as secure bank vaults rather than as windows on their deepest secrets. Not surprisingly, both state and non-state actors have embarked on concerted efforts to penetrate mobile networks and hand-held devices. Encryption, while a useful defense against less capable hackers, only slows down but does not stop the probes of technologically sophisticated hackers such as those in the employ of a number of states.

The bottom line is this: the smaller the telecommunications market, the easier it is for cyber hackers to successfully place backdoor “bugs” into the network and targets within it, especially if government and corporate resources are directed towards defending against “front door” attacks. On the bright side, it is easier to defend against attacks in a smaller market if governments, firms, service providers and consumers work to provide a common defense against both “front door” and “back door” hacking.

The implications for the South Pacific are significant.

In this new battleground physical distance cannot insulate South Pacific states from foreign attack because cyber-war knows no territorial boundaries. Countries like Australia and New Zealand provide inviting targets because not only are they integral and active members of Western espionage and security networks, but they also have proprietary technologies and intellectual property in strategic sectors of their trade-dependent economy (including niche defense-related firms) that are of interest to others. Similarly, French Polynesia and Melanesia have strategic importance as projection points for French power (including intelligence gathering), while Fiji is considered a vital waypoint for South Pacific lines of communication, including telecommunications as well as shipping. Smaller Pacific island states have increasingly become the object of investor attention in fisheries and previously unaccessible resources such as seabed minerals and offshore fossil fuel deposits, while the larger Melanesian counterparts, Papua New Guinea and the Solomons Islands, have seen heavy foreign investment in resource extractive enterprises. This has raised the strategic profile of the South Pacific, which in turns it into an arena of contestation for rival powers.

The rise in the South Pacific’s strategic profile has attracted the attention of larger competing states, particularly China, India and the Anglophone countries grouped in the 5 Eyes signals intelligence network. That has made telecommunications security a growing concern because if nothing else South Pacific corporate, academic and public service elites are relatively small and the overlap between them quite extensive, something that makes hacks on their personal data are a valuable tool of those who wish to use them for untoward purposes.

South Pacific public agencies and private firms have been relatively slow to react to the threat of cyber warfare. The data they hold on their employees, managers, policy elites and general population is an inviting “back door” for determined hackers seeking to exploit vulnerabilities in regional cyber networks. Since many South Pacific citizens are lax about separating their work and private electronic correspondence and records, the potential to access sensitive personal information is high.

Australia and New Zealand have been the subject of numerous “front door” cyber attacks and probes on public and private agencies, including an attack by Chinese-based hackers on New Zealand’s NIWA supercomputer carried out in concert with a similar attack by the same source on the supercomputer run by the US National Oceanographic and Atmospheric Administration (NIWA’s US counterpart). Australians and New Zealanders have been the targets of numerous “back door” intrusions such as phishing and other scams perpetrated by fraudsters and conmen. Yet successive governments in both countries have been relatively slow to recognize the new threats advancing towards them in the cyber-sphere. For example, only recently did New Zealand create dedicated cyber security cells within the intelligence community and just last year did it get around to amending the Government Communications Security Bureau (GCSB) Act to address vulnerabilities in domestic internet security. But that still may not be enough.

Until South Pacific states resolve the problem of institutional lag (that is, the time gap between the emergence of a technologically-driven threat and an institutional response on the part of those agencies responsible for defending against it), there is reason to be concerned for the security of private data stored in them. After all, in the age of cyberwar there is no such thing as a benign strategic environment.

Advisory.

36th Parallel Assessments does not offer specialised internet technology (IT) security services. However, it can offer simple tips derived from counter-intelligence operational guides for those concerned about the security of their private information. These can be grouped together under what can be called the “Battlestar Gallatica” (after the cult TV series) defense: when confronted with a “high tech” sophisticated telecommunications-channeled threats, it is best to go “low tech.” In this context “low tech” information security means returning to oral and paper records and electronic data that is removed from the cyber sphere. Paper records should not be digitalised and should be stored in old fashioned safes or security vaults. Oral conversations should take place on (preferably non-registered or unisted) land lines or in person. Mobile devices and/or “smart” video equipment should be changed regularly and be removed from rooms in which sensitive conversations are held (turning them off does not ensure that they cannot be remotely activated). Electronic files should be stored on computers and flash drives not connected to the internet (care should be taken when transferring materials on flash drives that may have been exposed to internet-connected computers). Secure couriers should be used to exchange sensitive information.

This may appear old-fashioned and inefficient, but it has the value of raising the physical costs to those wishing to illicitly access such information. Again, the bottom line is that modern telecommunications devices should be treated as windows on intimate moments or confidential thoughts rather than as easy ways of conveying information. By shutting these windows via the use of “low tech” alternatives a measure of information security can be achieved that is no longer possible in cyberspace.

36th Parallel Assessments offers policy makers risk analysis of their cyber vulnerabilities as well as the larger strategic context in which they exist. Please contact us for more details about our services.

]]>A hard rain is a’gonna fall.https://36th-parallel.com/2015/05/23/a-hard-rain-is-agonna-fall/
https://36th-parallel.com/2015/05/23/a-hard-rain-is-agonna-fall/#commentsSat, 23 May 2015 06:51:05 +0000http://36th-parallel.com/?p=53562Although 36th Parallel Assessments is loathe to prognosticate on fluid situations and current events,we have been thinking about how the conflict in Iraq has been going. Althoughwe do not believe that the Islamic State (IS) is anywhere close to being the global threat that it is portrayed to be in the West, we do believe that it is an existential threat to Syria, Iraq and perhaps some of their Sunni neighbours. Unlike al-Qaeda, which has limited territorial objectives, IS is political-religious movement with serious territorial ambitions that uses a mix of conventional and unconventional land warfare to achieve them. Given that difference, below is an assessment of the situation in Iraq after the fall of Ramadi into IS hands.

Iraq’s Anbar Province, a Sunni stronghold, is now under IS control. Tikrit was occupied a few months ago, Falluja and Haditha fell some weeks ago and Ramadi was conquered a week ago. To the northeast, Mosul remains in IS hands, while Baiji (site of major oil processing facilities) and Samarra remain under siege. With dozens of smaller towns in Anbar and elsewhere under IS rule, to include a front extending south-southeast from Tikrit to the eastern Baghdad suburbs along the Tigris River basin, the advance on the capital appears inevitable. Or is it? In this post I attempt to outline the strategic situation that the NZDF has thrust itself into.

Source: http://www.dailymail.co.uk

First, let’s look at the positives (from the West’s perspective). There is no way that IS can physically take and occupy Baghdad. A city of nearly four million people, most of them Shiia, Baghdad is a fortress when compared to what IS has tackled so far. It has concentrated military forces , is the seat of national government and is the location of numerous foreign military and diplomatic missions. It is therefore a strategic asset that Iran, the West and Iraqi Shiites cannot afford to lose. Moreover, IS is stretched too thin on the ground in Iraq to have the numbers to engage effective urban warfare against a determined and concentrated enemy, has no air power and does not have enough Sunni support in Baghdad to make up for the lack of numbers on the ground (A digression here: IS has a Salafist ideology buttressed by Ba’athist political and military organisation. Much of its leadership is drawn from the ranks of displaced Sunni Ba’athist officials in the Saddam Hussein regime, and it enjoys considerable support in Sunni Iraq. This accounts in significant measure for its success in Anbar).

Although not located in Anbar, Mosul, Samarra and Tikrit also have Sunni majorities, so the trend has been for IS to target and conquer urban areas where its sectarian support is matched by demographic numbers. The question remains as to whether its military campaign can be equally successful in Shiia dominant areas to the east and south of Baghdad, where Iranian forces also have a presence. That appears unlikely.

On the negative side from the West’s perspective, IS appears to be engaging in a pincer movement designed to surround and isolate western and northern Baghdad from the rest of the country. If it able to control the land routes in those areas it can cut off not only supply lines between Baghdad and its allied forces in the north and west, including Camp Taji where the NZDF is supposed to be stationed (I say supposedly because I have read an unconfirmed report that the NZDF deployment are stuck in Baghdad because of the increase in IS hostilities), but it can also proceed to apply a chokehold on supplies entering Baghdad via the north and west. As part of this strategy IS will target the power grid that supplies Baghdad, the majority of which comes from its north (including the power plant at Baiji, now under siege) as well as water supplies drawn from reservoirs in the northwest and piped to Baghdad. This will not be fatal if the Baghdad government can keep its land lines of supply in the south and east open, but it certainly will hinder its ability to keep some (more than likely Sunni) neighbourhoods stocked with life essentials, which will only exacerbate their alienation from central authorities and perhaps contribute to their support for IS.

Moreover, if more difficult to achieve, IS does not need to control all of the territory to the east and south of Baghdad in order to choke it off. All it has to do is establish a thin mobile front that can gain and hold intercept points on the major highways surrounding the city (and relatively close to the city limits at that, which obviates the need to fight Shiias further afield). This includes targeting power and water supplies coming from the south and east.

In other words, IS does not have to achieve strategic depth in order to choke the arterial routes leading into the city from the south and east. Coalition airpower may be able to stave off this eventuality for a while but without ground control that allows unimpeded re-supply, Baghdad will be operating on a scarcity regime within a few months. Resupply by air, while significant, cannot substitute for land supply, and it is worth noting that Baghdad airport as well as the infamous Abu Ghraib prison (where many Sunni militants are held) lie west of Baghdad and have recently been the subject of IS attacks. In fact, in the last year both Abu Ghraib and the prison at Taji have been the scenes of major prisoner jailbreaks orchestrated by IS, with many of the escapees now thought to have joined its ranks in an effort to increase its knowledge of the local fighting terrain.

A microcosmic version of this scenario involves the city of Taji, location of Camp Taji, the huge military base that is the destination point for the NZDF contribution to the anti-IS coalition. Straddling national highway one 20 miles northwest of Baghdad west of the Tigris river, Taji is the last significant town on the run south into Baghdad. With the old Saddam-era and later US military base capable of housing a mix of 40,000 Iraqi and foreign troops (although in reality there are far less on base), and home to a 1700 meter runway and Iraqi’s armoured corps, it is now the focal point of foreign training of Iraqi troops. As such and because of its location, it is a major target for IS, which controls the territory immediately east of the Tigris (about 11 miles away from the base). Since Taji is only 30 miles from Falluja, the presumption is that IS will mass it’s force to the east, west and north of Taji, then launch offensives designed to gain control of the town and highway. That would leave the base cut off from land routes and force it to rely on air re-supply and/or fight its way out of containment. If that happens it is doubtful that the NZDF troops will hunker down “behind the wire” and do nothing else. Whatever the scenario, isolating Camp Taji from Baghdad is a primary IS objective in the next months and will be essential to any move to surround and squeeze the capital city. The good news, from the West’s perspective, is that in order to isolate the base and sever its land link to Baghdad, IS will have to mass significant numbers of fighters, artillery and armour, something that makes it vulnerable to coalition air strikes.

The bottom line is that a successful pincer movement will slowly strangle and starve Baghdad, something that it turn will force the Iraq government to seek a political settlement on terms favourable to IS. That will entail the ejection of foreign forces and partition of Iraq. IS will claim Sunni-dominant areas and merge them with the territory it holds in Syria (IS controls roughly half of Syria’s territory) to establish its caliphate. It has no real interest in Iraqi Kurdistan because it cannot defeat the Peshmerga and other than the oil facilities on its western flank, Kurdistan has no strategic assets. Likewise, Shiia dominant areas of Iraq are too large and populated for IS to occupy, plus any incursion into Iraqi Shiia border territory with Iran will invite a military response from the latter. But where IS is in control, it has already begun to provide the basic services that the Iraq and Syrian governments no longer can, which raises the possibility that partition is already a fait acompli.

As stated in The Economist: “The danger is that the IS caliphate is becoming a permanent part of the region. The frontiers will shift in the coming months. But with the Kurds governing themselves in the north-east, and the Shias in the south, Iraqis question the government’s resolve in reversing IS’s hold on the Sunni north-west. “Partition is already a reality,” sighs a Sunni politician in exile. “It just has yet to be mapped.” (“The caliphate strikes back,” The Economist (on line) http://www.economist.com/news/middle-east-and-africa/21651762-fall-ramadi-shows-islamic-state-still-business-caliphate-strikes-back, May 23, 2015).

Thanks to the Iraqi Army abandoning their positions and leaving their equipment behind, IS has captured significant amounts of modern US made weaponry, including the equivalent of several armoured columns. It now has anti-aircraft munitions that eventually will score hits on coalition aircraft. Its fighters are a mix of seasoned veterans and unprofessional jihadis, but IS field commanders have been judicious in their use of each (for example, employing inexperienced foreign jihadists in first wave assaults or in suicide bombings using construction vehicles to breach enemy lines, followed by artillery fire and hardened ground forces). What that means is that IS has the realistic ability to cut off Baghdad’s land access to its near north and west, which will force the Iraq military and coalition partners to stage a counteroffensive to reclaim those lines of supply.

IS relies on mobility, manoeuvre and the selective application of mass force to achieve it ends. The fall of Ramadi was accomplished by rapidly surrounding it from the north and east and focusing firepower on one garrison in it. IS also has relatively unencumbered supply lines coming from Syria, and many suspect that supplies also come from Saudi Arabia and Turkey (Iraq has land borders with those states as well as Iran, Jordan and Kuwait. There is a strong belief–which could well be confirmed by the document retrieval made during the US Special Forces raid on a senior IS financier’s hideout in Syria– that the Saudis in particular are doing more than just financing IS as a hedge against Iran). The best check against its advances is demographic density in Shiia dominant parts of the country and the fact that any adventurous move in the east or south will be met by serious Shiia militia and Iranian military resistance (Sadr City, a bastion of Shiia militias, lies on the northeast of Baghdad and Basra, a major oil refining centre and home of the so-called (Shiia) marsh Arabs, is the capital of the south).

Source: Institute for the Study of War, September 26, 2014.

For those who believe that coalition air power is enough to stem the tide of IS advances, let me simply point out that history has shown that air power alone cannot determine success in a territorial conflict, especially an irregular or unconventional one. Vietnam is a case in point. In the battle for Ramadi the coalition conducted 275 air strikes and still saw the city fall to IS in the space of days. Thousands of coalition air strikes have been launched against IS and while they slowed down many IS advances and were decisive in battles between Kurdish peshmurga and ISIS forces in Syria and northeastern Iraq, they have not proven so when the forces they are supporting are too few or lack the will to fight when things get ugly. Since IS prefers to move quickly between urban areas and stage assaults from within them, the fear of civilian casualties hampers the coalition’s ability strike surgically at them in urban settings. That leaves the coalition with the task of trying to target IS convoys and garrisons, something that has proven hard to do given the dispersed nature of their campaign outside of urban areas.

It would seem that the best way to counter IS advances is to pre-emptively launch counter-offensives using a mix of foreign and Iraq troops and militias. That involves accepting Iranian military participation in concert with Western forces and requires moving sooner rather than later to at least stall IS’s progress southward. But if we take standard basic training as a guideline, then the Iraqi Army forces that have begun to be trained by the coalition troops will not be ready to fight until mid July. That may be too late to stop IS before it reaches Taji and the western Baghdad suburbs. Thus the conundrum faced by the coalition is to commit group troops and accept Iranian military help now or wait and hope that IS will slow down its advance due to its own requirements, thereby allowing training provided to the Iraqi Army by foreigners like the NZDF enough time to strengthen it to the point that it can take back the fight to IS with only marginal foreign assistance.

In recent days there have been claims that there has been both more and less spying by New Zealand intelligence agencies. Proponents and opponents of the intelligence community have seized on one or the other claim to argue in favour or against NZ’s involvement in the 5 Eyes signals intelligence network and the expansion of powers awarded the NZ intelligence community under amendments to various security Acts during the past few years. Given that there is a forthcoming parliamentary review of the NZ intelligence community, it is worth cutting to the gist of the issue of “balance” between civil liberties and intelligence operations.

Monitoring and intercept technologies available to signals and technical intelligence agencies today are superior to those of ten years ago, especially in the field of telecommunications. This allows signals and technical intelligence agencies to do much more than was possible before, something that legal frameworks governing signals and technical intelligence collection have had difficulty keeping pace with. It would therefore seemingly defy credulity to claim that that spy agencies are doing less spying now than in the past, especially given what is known about the 5 Eyes network from the Snowden documents currently being introduced into the public domain.

But perhaps there is a way to reconcile the opposing claims. Can spy agencies actually be doing less with more?

The assertion that there is less spying by NZ intelligence agencies now than seven years ago can be reconciled with the recently released GCSB annual report stating otherwise by understanding that under the intelligence community’s interpretation, “mass collection” is not equivalent to “mass surveillance.” Although the 5 Eyes and other national signals intelligence agencies use systems like PRISM to grab as much meta-data as possible as it passes through nodal points, that data has to be mined using systems like XKEYSCORE to obtain collectable information. Bulk “hovering” of all telecommunications in specific geographic or subject areas by agencies like the GCSB still has to be searched and analysed for it to become actionable intelligence. That is where the use of key words and phrases comes in, and these are not just of the usual “jihad” or “al-Qaeda” variety (since the bulk of intelligence collection is not focused on terrorism).

Although the GCSB may be doing more bulk collection of electronic data, it claims to be analysing proportionately less of what is collected than during the last year of the Fifth Labour government. So it is doing less with more. But a fundamental problem remains when it comes to intercepting telecommunications in democracies.

That problem is that whether it is analysed or not, mass collection of so-called meta-data of everyone’s personal and professional telecommunications presumably violates the democratic right to privacy as well as the presumption of innocence because it is obtained without there being a particular suspicion or specific reason for its acquisition (much less a warrant for its collection). Bulk intercepts can then be data-mined after the fact using classified search vehicles in order to build a case against individuals or groups.

That runs against basic tenets of democratic jurisprudence. Moreover, indefinite storing of meta-data that has not been analysed but which could be in the future in the event target (and key word) priorities change is something that is the subject of legal argument at this very moment.

There are therefore fundamental principles of democratic governance at stake in the very collection of meta-data, and these cannot be easily set aside just because the threat of terrorism is used as a justification. The issue is constitutional and needs to be resolved before the issue of “balance” can effectively be addressed.

However, for the sake of argument let’s accept that bulk collection is not mass surveillance and that the former is legal. How does one balance civil liberties and security under such circumstances?

The implementation of balance under such conditions starts at the point where data mining begins. What are the key phrases and words that identify targets for closer scrutiny? What are legitimate targets and what are not? Some search terms may be easy to understand and broadly accepted as necessary filters for the acquisition of more precise information about threats. Others might be more controversial and not widely accepted (say, “opposition leader sex life” or “anti-TPPA protest leaders”).

That is where the issue of effective intelligence oversight comes into play and on that score NZ is found wanting. There have been some cosmetic changes in the workings of and a slight extension of the powers of the Inspector General of Intelligence and Security, and the process of issuing domestic security warrants made more robust with the participation of the Commissioner of Security Warrants. But the Inspector General does not have powers of compulsion under oath, a weakness that is shared by the Parliamentary Intelligence and Security Committee (ISC). In fact, the latter is hand-picked by the government of the day, meets infrequently at best, has no professional staff assigned to it and only receives information that the directors of the SIS and GCSB decide it should receive. Hence, honest assessment of the oversight mechanisms of the NZ intelligence community shows that they are inadequate when it comes to providing effective and transparent proactive as well as retroactive oversight and review of our intelligence community’s activities given the range and scope of the latter.

These mechanisms are fewer and less effective than those of most liberal democracies (including our 5 Eyes partners), which means that NZ’s intelligence partners may well ask it to do things that they cannot do themselves due to the restrictions imposed by their own oversight mechanisms. That possibility should be of concern and needs to be addressed. Relying on the good faith of NZ intelligence agencies involved is not enough, especially given their history of playing loose with the rules when it suits them.

Therein lies the core problem with regard to balancing civil liberties and intelligence operations. If there is effective intelligence oversight before the fact (“proactive” in the sense that oversight mechanisms dictate was is permissible data-mining before it occurs) as well as after the fact (“retroactive” in the sense that oversight mechanisms hold intelligence officials to account for their use of bulk collection and data-mining), then balance can be achieved.

However, if such effective oversight is lacking–again, both proactive and retroactive in nature–then the “balance” will be skewed heavily in favour of unaccountable intelligence collection and usage. That is not acceptable in a democracy but is in fact the situation at present in New Zealand.

Then there are the issues of how national security is defined and what role intelligence agencies play in its defense, on whose behalf NZ intelligence agencies engage in espionage, and with who the intelligence obtained by human, signals and technical means is shared. This matters because trying to achieve balance between civil liberties and intelligence operations without addressing the larger context in which the latter occur is much like putting the cart before the horse.

Related Link.

Director Paul G. Buchanan was interviewed on www.eveningreport.nz about the implications of revelations that New Zealand spies on its friends, neighbours and trading partners.

]]>https://36th-parallel.com/2015/03/18/balancing-civil-liberties-and-intelligence-operations-in-new-zealand/feed/1Analytic Brief: Counter-terrorism is a matter of law enforcement.https://36th-parallel.com/2015/01/28/analytic-brief-counter-terrorism-is-a-matter-of-law-enforcement/
Tue, 27 Jan 2015 22:37:41 +0000http://36th-parallel.com/?p=44960Known for its South Pacific focus, 36th Parallel Assessments covers global strategic and geopolitical issues as well. From time to time matters of global import are highlighted in our analytic brief series. This is one such occasion.

The post 9/11 security environment has been dominated by the spectre of terrorism, mostly if not exclusively of the Islamic-inspired sort. In many liberal democracies the response to the threat of this type of extremist violence has been the promulgation of a raft of anti-terrorism laws and organisational changes in national security agencies, the sum total of which has been an erosion of civil liberties in the pursuit of better security. Some have gone so far as to speak of a “war” on terrorism, arguing that Islamicist terrorism in particular is an existential threat to Western societies that demands the prioritisation of security over individual and collective rights.

Although ideological extremists see themselves at war, this response on the part of democratic states, and the characterisation of the fight against terrorism as a “war” marshaled along cultural or civilisation lines, is mistaken. The proper response is to see terrorism not in ideological terms, with the focus on the motivation of the perpetrators, but in criminal terms, where the focus is on the nature of the crime. Seeing terrorism as the latter allows those who practice it to be treated as part of a violent criminal conspiracy much like the Mafia or international drug smuggling syndicates. This places the counter-terrorism emphasis on the act rather than the motivation, thereby removing arguments about cause and justification from the equation.

There is no reason for Western democracies to go to war. Whatever its motivation, terrorism poses no existential threat to any stable society, much less liberal democracies. Only failed states, failing states and those at civil war face the real threat of takeover from the likes of the Islamic State or al-Qaeda in the Arabian Peninsula. For Western democracies under terrorist attack, the institutional apparatus of the State will not fall, political society will not unravel and the social fabric will to tear. The consent of the majority will be maintained. If anything, the state and society will coalesce against the perpetrators.

But there is a caveat to this: both the democratic state and society must beware the sucker ploy.

As an irregular warfare tactic terrorism is a weapon of the militarily weak that is not only a form of intimidation but a type of provocation as well. It has a target, a subject and an objective. Terrorist attacks against defenseless targets may be designed to punish or retaliate against the larger society, but they are also attempting to lure democratic states into undertaking security measures out of proportion to the real threat involved. In other words, the weaker party commits an atrocity or outrage in order to provoke an overreaction from the stronger subject, in this case Western liberal democracies.

The overreaction victimises more than just the perpetrators and legitimises their grievances. In doing so, the democratic state plays into the hands of terrorist objectives by providing grounds for recruitment, continuation and expansion of their struggle. When democratic societies, panicked by fear, begin to retaliate against domestic minority populations from whence terrorists are believed to emanate, then the sucker ploy will have proven successful.

The sucker ploy has been at the core of al-Qaeda’s strategy from the beginning. Enunciated by Osama bin Laden, the idea behind the attacks on the World Trade Centre and Pentagon, then the Bali, Madrid and London bombings, was to cause the entire West to overreact by scapegoating all Muslims and subjecting them to undemocratic security checks, to include mass surveillance, warrantless searches and arrest and detention without charge. With the majority supporting such moves, the Muslim minorities in the West become further alienated. That serves to confirm the al-Qaeda narrative that the West is at war with the entire Muslim world, which bin Laden and his acolytes hoped would generate a groundswell of conflict between Muslims and non-Muslims on a global scale.

The US and UK duly obliged by using 9/11 as one pretext for invading Iraq, which had nothing to do with the events of that day and which had no Islamic extremists operating in its midst at the time. It does now.

After the possibility of staging spectacular large-scale attacks like 9/11 became increasingly difficult due to Western counter-measures, al-Qaeda 2.0 emerged. Its modus operandi, as repeatedly outlined and exhorted by the on-line magazine Inspire, is to encourage self-radicalisedjihadists born in the West to engage in low-level, small cell (2-5 people) or so-called “lone wolf” attacks by single individuals on targets of opportunity using their local knowledge of the cultural and physical terrain in which they live.

In recent years the Syrian civil war and rise of the Islamic State have provided recruits with the opportunity to sharpen their knowledge of weaponry, tactics and combat skills with an eye towards future use at home in the event that they survive the foreign adventure (although less than 50 percent of them do). With reportedly 15,000 foreign fighters joining Syrians and Iraqis in the Islamic State ranks and a number of Westerners gravitating towards al-Qaeda, there are plenty of returning jihadiststo be concerned about, especially given the availability of soft targets in open societies.

Part Two: Tactics, Targets and Responses.

Photo: Google Images/n.a.

The tactical focus of the autonomous, decentralized terrorist strategy is on “everyday” targets. Shopping malls, sports venues, transportation hubs, entertainment venues, non-military government offices, media outlets, houses of worship, schools and universities–all of these present soft targets with significant symbolic value where a relatively small criminal act of violence can generate waves of apprehension across the larger population, thereby prompting a government overreaction as much in an effort to calm public fears as it is to prevent further attacks.

The range and number of these targets makes guarding all them very difficult, and if the perpetrators plan in secret and maintain operational secrecy up until the moment of engagement, then they are impossible to stop regardless of the security measures in place. Short of adopting a garrison state or open-air prison approach to society as a whole, there is no absolute physical defense against determined and prepared low level operators, especially when they have access not only to weapons but common household or industrial products that can be used to untoward ends. This is as much true for psychopaths as it is for terrorists.

Although it risks detection because of the coordination and numbers involved, one variant of the low-level, decentralised terrorist strategy is the so-called “swarm” attack, whereby several small cells engage multiple targets simultaneously or in rapid sequence, even in several countries if possible. This is designed to stretch the security apparatus to its limits, thereby causing confusion and delays in response while demonstrating the attacker’s capability to strike at will virtually anywhere. At that point the military–ostensibly used for external defense–is often called in, thereby giving all the appearance of a nation at war. Such is now happening in Belgium and France.

The evolution of terrorist tactics notwithstanding, if we strip away all the ideological gloss what is left is a transnational criminal enterprise. The proper response needs to be police rather than military in nature, and requires increased intelligence sharing and police cooperation amongst nations. The legislative response should be not to create a separate body of political crimes deserving of increased (and undemocratic) coercive attention from the state, but to bolster criminal law to include hard penalties for carrying out, financing, supporting or encouraging politically motivated violence. All of this can be done without militarising the state and compromising basic democratic values regarding the freedoms of speech, assembly and movement.

What is not needed but unfortunately has been a reflexive response in the West, is expanded anti-terrorist legislation and sweeping powers of search, surveillance and seizure that cover the entire population rather than those suspected of harbouring extremist tendencies. This violates the presumption of innocence as well as the right to privacy of the vast majority of citizens, to which can now be added restrictions on freedom of movement for those who, even without criminal backgrounds, are suspected of planning to travel to join extremist groups abroad.

Such measures are not entirely effective, as the Boston Marathon bombings, Sydney hostage crisis (the work of a lone mentally ill individual with delusions of Islamic grandeur who was out on bail for sexual crimes and accessory to murder) and the Charlie Hebdo attacks have shown (Australia, the US and France have very strong antiterrorism measures, to include the Patriot Act and NSA/FBI mass surveillance in the US, overtly authoritarian security legislation dating back to the Fifth Republic in France–which was a response to the Algerian Crisis of 1958– and increasingly severe anti-terrorist legislation in Australia).

There is a clear need to upgrade police intelligence gathering, sharing and operational procedures in order to combat the terrorism threat. The main impediment to that has not been a public lack of cooperation or the inadequacy of extant criminal law (which needs regular upgrading in any event due to the evolution of crime–for example, 40 years ago cyber security and cyber crime were not issues that needed to be covered by law).

Instead, it has mainly been due to inter-agency rivalries between domestic security and intelligence agencies and a lack of international cooperation on ideologically charged matters such as Islamic terrorism (for example, between Israel and its Arab neighbours and the US and China). Given advents in telecommunications technologies, there has to be a priority focus on social media intelligence gathering, particularly of platforms that use encryption to shield criminal behaviour. But all of that can be done without the mass curtailment of civil liberties, and without militarising the response to the point that it gives all the appearances of cultures at war.

It should be obvious that the underlying causes of terrorism in the West need to be addressed as part of a comprehensive strategy for dealing with the problem. These involve a host of socio-economic, diplomatic and cultural policy areas and a willingness by politicians to broach debate on sensitive topics related to them (such as the question of assimilation of migrants, border controls, minority youth unemployment etc.).

But in the narrow sense of security counter-measures, the key is to not exaggerate the terrorist threat, to strip it of its political significance and to use more efficient policing and intelligence gathering backed by criminal law to treat it not as a special type of (political) crime but as just the violent acts of criminal conspirators.

This is just the domestic side of the counter-terrorism coin. The other side involves defeating ideological extremist groups that have established military and political beachheads in the Middle East and elsewhere, and from where returning foreign fighters come from. That is a matter of foreign and external security policy where the military option is most properly considered.

In the end, the fight against violent ideological extremism in democracies involves as much de-legitimization of the cause as it does increasing physical security from the attack. The first step in doing so is to treat ideologically motivated terrorism as a criminal enterprise, not as a uniquely dangerous type of political or cultural expression.

Conclusion

Although terrorism in an unpleasant reality of modern life, it is not the existential threat that it is often perceived to be. 36th Parallel Assessments provides decision-makers expert advice on how to assess terrorist threats and how to respond to them given the context in which decisions are made.

Political risk assessments are an under appreciated aspect of the due diligence undertaken as part of the process of engaging in cultural, diplomatic or economic exchanges in foreign locations. Most political risk analysis, including country risk assessments, are done by large credit rating agencies and insurance underwriters. Some nations provide country risk assessments for citizens traveling abroad, and many undertake political risk analysis as part of foreign policy information-gathering. Some journalistic outlets, be they subject specific (trade journals) or broad-based in focus, offer yearly assessments of regional and country risk profiles. Much less dedicated attention is paid by private entities to this important aspect of due diligence, who when concerned at all rely on the insurance industry, government reports, journals and the information provided by foreign interlocutors for information on the political as well as physical risks surrounding any particular investment opportunity.

The South Pacific is a region that is particularly underserved when it comes to political risk analysis. There are few specialists in South Pacific geopolitics and strategic analysis, and those that exist are located in academia. The large global firms that undertake political risk analyses by and large do not have South Pacific specialists, so rely on government and non-governmental data collectors for their appraisals.

36th Parallel Assessments specialises in South Pacific political risk analysis. It fills a niche in the industry and provides clients with focused assessments of country, regional and subject-specific conditions and trends.

As part of its services 36th Parallel Assessments provides client-focused country assessments for a flat fee. The service is based on ten hours minimum research and writing and delivers a PDF hard copy and electronic report on the matter under scrutiny (the assessment has been reformatted here to fit within web page specifications). The language of the deliverable is non-academic and designed to facilitate quick uptake by decision-makers.

The sample assessment offered below is an analysis of New Caledonian political risk for the period 2014-20.

The time period is governed by the impending referendum on New Caledonian independence, which must be completed by 2019. Given the weight of mining on the national economy, the hypothetical client is a foreign-based mining industry actor with an investment interest in the Northern Province (one of the less developed of the three New Caledonian provinces), and in particular the area known as the Koumac district that has seen renewed interest in previously abandoned mining projects.

New Caledonia has a low-medium political risk ranking over the next five years.

New Caledonia faces political uncertainty in the form of a referendum on independence from France scheduled for an as of yet undetermined date between now and 2019.

Tensions between indigenous Melanesians (Kanaks) and French settlers (Caldoche and Metros) have erupted in violence in previous decades, and the process of power transfer outlined in the 1999 Noumea Accords is designed to definitively and equitably settle the country’s status via popular vote.

Public opinion is divided on the issue, which along with concerns about the cost of living, environmental degradation, working conditions, ethnic tensions and foreign immigration have contributed to the air of uncertainty confronting the nation.

36th Parallel Assessments offers an overview of the situation, focusing on national politics, diplomatic relations, politics in the North Province and conditions in Koumac, the latter two chosen because the investment interest is located there.

The analysis concludes that New Caledonia is a low medium political risk for foreign investors regardless of the outcome of the referendum, which at this point appears to favor those who wish to remain as a semi-independent overseas French territory.

What risk exists will likely be more political or industrial rather than existential. Relations with the North Province government will require attention.

Introduction

Contained within is a political risk analysis for New Caledonia for the period 2014-2020. It has been prepared by 36th Parallel Assessments as part of the due diligence done in support of an investment interest in New Caledonia. The analysis consists of an introduction, background, and brief analyses of national, provincial and local politics as well as New Caledonian foreign relations. The methodology for the study consisted of surveys of the academic, business and journalist literatures focused on New Caledonia; government documents from New Zealand, Australia, the US and France; international organization data bases and analyses about New Caledonia; credit rating agency and insurance underwriter reports on that country; travel advisories; and discreet, off the record/background/not for attribution conversations with individuals familiar with New Caledonian affairs. A brief online reference list is included at the end of the report.

Disclaimer

This 36th Parallel Assessments political risk analysis and country ranking is for general information purposes only.

Background

New Caledonia is a former French colony that holds the unique status of special French overseas collectivity. That status gives it a level of political independence and degree of autonomy in the conduct of its affairs above that of other former French colonies. In this it is closer to the Cook Islands relationship with New Zealand rather than Tahiti’s relationship with France when it comes to self-governance, as it maintains its own popularly-elected national, provincial and local governments, independent foreign relations with other Pacific states, and majority control over domestic resource extraction and utilization.

Yet it is not entirely sovereign. The New Caledonian government is responsible for taxation, mining regulation, labour law, public health and education, agriculture and foreign trade. France provides the public bureaucracy and is responsible for internal and external security, justice, global diplomatic relations and Treasury. New Caledonians enjoy dual citizenship, two national flags, and parallel justice systems that are based on French and local customary law, respectively. Two representatives in the French National Assembly and two French Senators represent New Caledonia in France. French authority in New Caledonia is exercised through a High Commissioner and a system of municipal administrators.

New Caledonia has a population of 256,000. Forty four percent are native Melanesians known as Kanaks, 30 percent are Europeans descendent from the original colonizers along with newer arrivals and members of the French civil service and military (commonly known as Caldoche or Metros, depending on how long they have lived in New Caledonia), with the remainder comprising a mix of Polynesians (mostly from Tahiti, Wallis and Fortuna), Indonesians, Vietnamese, other Melanesians (Fijians and Vanuatians) and immigrants from other French former colonies. The majority of the population lives on the main island of Grand Terre, with small populations residing in the Isle of Pines and Loyalty Islands. Forty percent of the population is under age 20 and 75 percent live in the South Province of Grande Terre, mostly in and around the capital Noumea (population: 165,000 out of a total of 185,000 in the South Province).

New Caledonia is a classic instance of what is known as a “dual society.” The majority of the population, including the national elite, lives in relatively modernized urban areas in and around Noumea and is connected to the globalized political economy via technological, cultural, entrepreneurial and social means. The minority, located in the North and Loyalty Islands, live in largely pre-modern rural conditions with traditional social hierarchies and are only causally connected to the outside world via technology, tourism and relatively limited economic enterprise. This has pushed internal migration from North to South Grande Terre in pursuit of economic opportunity, although in recent years the trend has slowed as large-scale enterprise, particularly mining, has increased operations in the North.

The country is divided into three administrative districts: the North Province, the South Province and the Loyalty islands, covering a total of 33 municipalities (also known as communes or districts). 74 percent of the Kanak population lives in the North Province, and 80 percent of the population of the Loyalty Islands is Kanak. The South Province, where the bulk of the European population is located, contains more than twice the population of the North Province and Loyalty Islands.

New Caledonia has a labour force of approximately 105,000, with an unemployment rate of 17 percent (higher amongst Kanaks). The average minimum wage is approximately 1,250 Euros per month. The unionization rate is 25 percent in the public sector and 15 percent in the private sector. Most employment is found in the manufacturing, construction, mining, service and public sectors, with undeclared part time work cash work prevalent in the provision of services. Both corporate and individual taxes are relatively low but the cost of living is high due to extreme dependence on commodity imports. New Caledonia is estimated to hold 25 percent of the world’s nickel reserves. Nickel mining constitutes 15 percent of the national GDP and 90 percent of its export earnings. After a slump in nickel prices during the 2008-2011 global financial crises, nickel prices climbed on the back on increased international demand and are forecast to continue to rise in the near future. This in turn is believed to impact positively on domestic economic growth, which is forecast to rise three percent in the 2014-15 fiscal year and remain above two percent thereafter. French remittances comprise 25 percent of GDP, with the rest made up of manufacturing and services. At over US$ 38,000 per capita, New Caledonia has a higher GDP than New Zealand, although income inequality and wealth concentration is significant.

Source: ChrisDHDR via Wikimedia Commons

National Politics

New Caledonia is governed by a 54 seat Territorial Congress elected at five-year intervals that appoints an 11 person Executive based on proportional representation of parties in the legislature. Congressional seats are allocated based upon party representation in three Provincial Assemblies (those of the North Province, South Province and Loyalty Islands). The major division amongst New Caledonian political parties is on the issue of independence from France. Loyalist parties, which occupy the Right of the political spectrum, want to remain French, although they differ on degrees of autonomy from the French state. Pro-independence parties, on the Left of the political spectrum, want to gain sovereign control of the country’s affairs, although here too there are differences between parties on the process and extent to which power is transferred to New Caledonian authority. Interestingly, militant parties on both extremes of the political spectrum lost ground in the 2014 elections when compared to 2009, so the bilateral move towards centrism suggests that political compromise is possible.

As is common in small countries, personalities are as important as ideology in New Caledonian politics. This has led to numerous splits and factional disputes on both sides of the political spectrum, and promotes a tendency towards populism during election years (where many promises are made that have no possibility of being honoured). There is also a 16 member Customary Senate selected from 8 customary areas and 57 customary chiefdoms (2 Senators from each customary area). The Customary Senate has an advisory role on all matters related to Kanak identity, and local customary authorities have legal jurisdiction on issues such as marriage, inheritance, adoption and land issues. However, the French penal system applies to most matters of criminal and civil law.

Under terms of the 1998 Noumea Accords, which commits France and New Caledonia to a process in which political authority is gradually transferred from the former to the latter by 2020, the May 11, 2014 election (the last under the Accords) installed a Territorial Congress that will be responsible for holding a national referendum on independence by 2019. 60 percent of the Territorial Congress must agree to hold the referendum, and then set a date. There can be up to three referenda held during the five-year time frame if the anti-independence vote prevails in the first instance (a majority vote for independence will be final). Should it prove impossible for the Congress to agree on holding a referendum by 2018, the French state will have to organize one. No political party can modify that.

Before the referendum can be held, the process of devolving non-core state functions such as public health and education needs to be completed, something that has not occurred as the date of this writing. Only after this part of the process is complete can Congress attempt to set a date for the referendum on transferring the core sovereign powers—police, justice, military, finance and foreign affairs—to local control. The delay in accomplishing the preliminary handover suggests that there will time constraints placed on the holding of multiple referenda, something that works in favor of the Loyalist agenda.

The current government, led by President Cynthia Ligeard of the Loyalist Rassemblement-Union pour un mouvement populaire (R-UMP) party, was installed on the basis of a decisive (59 percent) victory of Loyalist parties in the 2014 elections. Six of the eleven members of the executive branch come from Loyalist parties, as does the president of the Territorial Assembly. However, Loyalists saw a drop from 31 to 29 seats in the Territorial Congress while pro-independence parties led by the Front de Libération Nationale Kanak et Socialiste, (Kanak and Socialist National Liberation Front, or FLNKS) increased their share from 23 to 25. This was due mostly to FLNKS electoral gains in the South Province coupled with their dominance of the North Province and Loyalty Islands (where FLNKS and other pro-independence parties control 18 of 22 provincial assembly seats in the North Province and 14 out of 14 of seats in the Loyalty Islands).

The distribution of seats in the Territorial Congress suggests that it will impossible for either government or opposition to rally the 60 percent (33 seats) of Congressional votes in favor of a referendum without significant crossing of the aisle. That in turn will lead to political negotiations within and between each camp in pursuit of workable compromises that are satisfactory to most of the factions within each before a vote on holding the referendum can be held. The distribution of seats makes it easier for the Loyalist government to secure the additional votes required for a referendum to be approved, but the process of convincing four pro-independence representatives to cross over will require considerable negotiation.The possibility of a majority vote in favour of complete independence is unlikely given that the horse-trading involved in securing a polling date will work against referendum language that speaks to a full transfer of sovereignty.

There is a fairly strong union movement in New Caledonia, elements of which have relatively militant tendencies (in that they are not averse to industrial sabotage or prolonged strikes to get their point across). Eleven unions represent the organized labour force of approximately 20,000 members, with the USTKE (representing Kanak workers and advocating socialism, with ties to the FLNKS and Worker’s Parties, prevalent in the manufacturing and service sectors), USOENC (with a majority representation in the nickel mining and metallurgy industries) and public sector union FCCNC being of particular note. Union presence is strong in transportation and manufacturing, and strike activity is frequent across the economic spectrum (averaging 52 strikes per year in the period 2006-12). Working conditions, the high cost of living, wage adjustments, environmental concerns and the importation of foreign workers (especially in the mining industry) are the most frequent points of grievance. There is no central labour confederation and ideological disputes have impeded long-term organisational unity amongst the organised labour force, but the ability of individual unions to mobilize their members with or without support from other unions is significant.

Even with the gains made by the pro-independence forces in 2014, it is unlikely that a referendum on independence will go in their favour. Not only do polls have Loyalist sentiment well ahead of pro-independence views, but also the implications of a complete withdrawal from the French state are apparent even to pro-independence politicians. Moves to amend the Noumea Accords so that they result in something less than a referendum on full independence are already being discussed by both sides of the political divide, and the electoral rules under which a referendum will be held favor Loyalists (by among other things allowing new migrants to vote). Notwithstanding the demographic imperative of higher Kanak birthrates, European immigration continues to maintain the relative balance of Kanaks to non-Kanaks in favor of the latter. That means that, with just 44 percent of the population, the pro-independence Kanak factions have an uphill battle in the court of public opinion, and will have to convince a sizable number of non-Kanak voters to toe the pro-independence line. Given financial dependence on France, that is hard to envision.

A pro-independence vote is unlikely to produce a dramatic shift in the regulatory or political regimes governing New Caledonia. All political factions understand the importance of nickel mining to the national economy and the benefits accrued from close association with France. Even if independence were to be granted, it may in fact be more a case of semi-independence or mixed governance along lines already established rather than a full break with the mother country. Some core state activities such as domestic security may be transferred to local authority, but it is likely that France will continue to hold a patron or overseer role in others. There is a possibility of unrest if the pro-independence vote fails.

Younger Kanaks, particularly in the urbanized areas of the South Province, are more anti-imperialist than their parents and support a form of Melanesian Socialism that argues in favor of total indigenous control of politics and the productive apparatus. However, the downside of transiting to such an arrangement is far too great for the other sectors of the population to accept, so even if there is unrest and bouts of violence in response to defeat at the polls, it is unlikely that militant pro-independence action will be widely supported, protracted or permanently damaging to the contemporary status quo.

An additional factor insuring against destabilizing unrest surrounding the referendum is the presence of French military personnel on New Caledonian soil. The French maintain a presence of 2,900 troops in New Caledonia, including a regiment of French Marines that constitute the bulk of French land forces in the South Pacific. There are also Naval and Air Force assets deployed to New Caledonia as well as 750 Gendarmes. In 2009 Australia and France signed a Defense Cooperation Agreement/Status of Forces Agreement (DCA/SOFA) that binds them together in regional security operations and training well after the 2019 independence decision date, so it appears unlikely that will be discontinued in the event of a pro-independence vote. In fact, New Caledonia represents one of two major axes of the French military presence in the South Pacific (the other being Tahiti, where the French Pacific Fleet is home ported). With few alternatives when it comes to basing land forces in the South Pacific and the Australian DCA/SOFA in place, the French military is likely to remain in New Caledonia regardless of the outcome of the referendum.

What may change is its role in internal security, where indigenous police forces may replace the French constabulary as part of a partial or complete transfer of sovereign powers. In light of the French security presence (which is responsible for some of the French remittances factored into the New Caledonian GDP), it is possible that the size and character of that presence will become part of the political negotiations surrounding the referendum.

Beyond the question of independence, the major sources of social tension in New Caledonia are environmental degradation from mining, the high cost of living, and unemployment, especially amongst Kanaks. At 17 percent the unemployment rate reflects the poor labor absorption capacity of the national economy, particularly with regard to skilled labour. Serious dependence on food and energy imports makes New Caledonia vulnerable to supplier cost increases. The New Caledonian currency is the Pacific Franc, which is pegged to the Euro. In light of the looming referendum, there is a concern in financial circles that a move to full independence will bring with it the replacement of the Pacific Franc with a much less valued national currency, thereby increasing the cost of imported goods, to include basic domestic staples. That is seen as an invitation to social unrest.

There is increasing popular resistance to environmental damaging mining practices. Numerous strikes and demonstrations against environmental pollution have occurred over the last five years, with some of these becoming violent. As a result it is a government and union priority to emphasize environmental regime compliance.

In broad terms, the risk of instability stemming from the vote on independence is considered by most observers to be low. On political risk indicators developed by insurance underwriters, New Caledonia consistently ranks as a 2 on a scale from 1 (low risk) to 7 (high risk). On political instability scales developed by credit rating agencies the risk exposure is slightly higher (roughly 5 on a scale of 10) owing to government turnover in years past and the prevalence of strikes and demonstrations as a form of protest. However, as part of the referendum process outlined in the Noumea Accords, the government installed in 2014 has an 18 month period of grace that means that even if a coalition partner withdraws from government it will not force its dissolution (as has been the case in the past). This may allow the newly installed authorities some room for maneuver when embarking on negotiations over the timing and content of the referendum. This suggest that continuity, relative stability and negotiated compromises will be the hallmark of national politics over the next five years even if there are periodic bouts of labour or political unrest.

North Province Politics

The North Province has a population of 45,137 (2012), of which 74 percent are Kanak, 13 percent European and 13 percent other ethnicities. Its capital is Kone. The 22 seat Provincial Assembly is dominated by pro-independence parties led by the FLNKS (18 seats). This dominance makes the North Province the core of the pro-independence constituency. Along with the Loyalty Islands, the North Province is much less urbanized than the South Province, with higher levels of poverty and illiteracy than in the south. Most of the village economies revolve around subsistence agriculture (yams and taro in particular), fishing, tourism and artisanal craftwork, with cattle ranching and larger land holdings mostly resting in Caldoche hands.

Mining became of primary importance to the provincial economy as the Konaimbo Massif became increasingly exploitable, with that trend strengthening in the near to medium future as a result of ongoing demand for nickel and upgrades to extraction and production facilities throughout the province. There are currently 30 mining operations in the North Province. As in the South Province, labour shortages have forced the importation of foreign labour, particularly from the Philippines. This has become a contentious issue at both the provincial and national levels.

Because of its strong nationalist sentiment, the North Province government has claimed a stake in resource extraction enterprises, nickel mining in particular. The North Province government has a financial and investment arm that wholly owns the Societe Miniere du Sud Pacific (SMSP). SMSP holds a 51 percent interest in the Konaimbo mine project developed with the firm Glencore-Xstrata under the corporate name Konaimbo Nickel SAS. It also has, along with other provincial governments, a thirty percent stake in Societe Le Nickel (SLN), the largest local mining enterprise. Depending on political conditions it is possible that the provincial authorities will seek to increase their share in such public-private ventures in the near to medium future, to include sub-contracting work.

Politics in Koumac

Koumac is a commune, or municipality, in the North Province, one of 33 such districts nation-wide. It has a population of 3700, 40 percent of whom are European (Caldoche), 30 percent of whom are Kanak, 13 percent mixed race and 17 percent being from other ethnicities. This demographic is unusual in that Caldoche are the dominant group, perhaps due to the fact that Caldoche cattle ranchers have a strong historic presence in the district (there is a historic rodeo held in Koumac every year). In addition, the French military maintains a company-sized permanent training and recruitment depot in Koumac, with the total number of troops in the North Province including a detachment in Kone reaching 450.

The Koumac municipal council is made up of 27 elected members. Led by the local umbrella party Union for Communal Progress (UPPC), loyalists dominate politics in Koumac, to include the Mayoralty (currently held by the Honorable Wilfrid Weiss, a member of Avenir Ensemble). The Sixth Deputy for Facilities and Construction, Marc Devillers, is a UPPC member and head of the Communal Mining Committee. Three FLNKS members, who campaigned under the UPPC banner in local elections, hold seats on the council and chair the Tribal Affairs and Health and Social Welfare Committees, respectively.

The composition of the Koumac council elected in May 2014 puts the district at odds with the rest of the North Province when it comes to the issue of independence yet ensures relative stability within the commune given the demographic. The assignment of municipal council committee chairs to FLNKS members demonstrates a willingness to cooperate on the part of the UPPC-led majority. However, the relationship between the local political authorities (represented in the North Province Council by the UPPC mayor and a UPPC council member) and those of North Province may be a source of tension beyond the question of independence, particularly when it comes to resource management and foreign investment.

The focal point of economic activity in Koumac has been and is the Tiebaghi chromite and nickel mines. The chromite mine was permanently closed in 1990, but after exploitable nickel deposits were discovered in the 1970s a nickel mine was opened, then expanded in the 1990s. Operated by the Societe Le Nickel (SLN), a New Caledonian subsidiary of the French metals group ERAMET owned in conjunction with Societe Miniere du Sud Pacific (SMSP), the mine has continuously grown since the early 2000s and includes a 1.5 kilometer ore conveyor at the to seaside loading facilities at the Karembe wharf. It currently extracts approximately 60,000 tons of nickel ore per year, with projections for in excess of 75,000 tons by 2015, or 30 percent of SLN’s production. As part of the expansion of the Tiebaghi operation it has become necessary to systematically use explosives, as the ground iron crust has become too hard for extraction using traditional techniques and machinery. The Tiebaghi mine is the subject of numerous oversight mechanisms, including customary, municipal, provincial and national authorites focused on environmental impact and working conditions. The mine has added several hundred jobs to the local economy over the last decade and is seen as a good example of public-private, community focused cooperation.

Koumac District

Map courtesy of Wikimedia Commons

Foreign Relations

New Caledonia is a member of numerous international organizations and diplomatic groupings, and has particularly strong representation in Melanesia and the wider South Pacific. This includes associate membership in the Pacific Island Forum (PIF), full membership in the Secretariat of the Pacific Community (SPC), Melanesian Spearhead Group (MSG), United Nations (UN), International Labour Organisation (ILO), International Confederation of Trade Unions (ICTFU), French Pacific Banking Agreement, and the UN Economic and Social Commission for Asia and the Pacific.

New Caledonian diplomatic representation overseas is small owing to its limited skill base and French control over the bulk of its foreign affairs. However in the Pacific region New Caledonia represents itself and has a unique presence in the Melanesian Spearhead Group. The MSG is a transnational organization grouping the Melanesian nations of the Southwestern Pacific. The MSG Secretariat is located in Port Vila, Vanuatu, in a building built and donated by the People’s Republic of China. The MSG Director General position rotates every two years.

In 2013 a New Caledonian, Victor Tutugoro, assumed the Director General’s position, with the MSG 25th anniversary celebrations held in Noumea that year. New Caledonia’s representation in the MSG is unique. It is not represented by the elected government but by the FLNKS. This is due to the fact of its special status vis a vis France and the Kanak identity of the FLNKS. Only Melanesian indigenous representation is accepted for membership by the MSG, which excludes the New Caledonian government because of its Caldoche nature and its lack of full sovereignty.

In recent years the MSG has become a rival to the PIF, a move instigated by Fijian strongman Voreque “Frank” Baimimarama because of his perception that Polynesian interests were given preference in the PIF and that the PIF was subservient to Western interests in any event (particularly those of Australia and New Zealand). Since the Melanesian states are more resource endowed than the Polynesian island states, creation of the MSG afforded the former a strong diplomatic counterweight to the PIF. The MSG already has its own World Trade Organisation and GATT-approved preferential trade agreement amongst member states, and is working on developing an indigenous Rapid Reaction Force to cope with social unrest and political instability in Melanesia.

One of the diplomatic initiatives promoted by Baimimarama within the MSG is a turn away from Western-centric diplomacy and towards Asia, China in particular. This is seen as a source of leverage based on mutual advantage, as China and other non-Western states are interested in access to Melanesian resources. Having stronger ties with non-Western powers allow MSG members to resist pressure from their traditional Western patrons on matters of diplomatic import, including but not limited to regional affairs. This can impact on New Caledonian domestic politics because the MSG, which consists of Fiji, Papua New Guinea, the Solomon Islands and Vanuatu as well as the FLNKS, supports the pro-independence movement in New Caledonia and its quest for full sovereignty.

It therefore may lobby for a removal of French forces from Grande Terre (arguing that a MSG rapid response force can cope with disturbances in member states yet not be prone to military intervention or adventurism based on neo-imperialist or post-colonial objectives). It may also seek to diplomatically press other regional neighbours and cultivate foreign powers in support for the independence bid. Although it is unlikely that such an MSG campaign will prosper and instead result in pushback in the form of increased resistance from Loyalists in and outside of the New Caledonian government as well as France, Australia and New Zealand, it could have the effect of exacerbating internal tensions within New Caledonia over the issue.

Beyond that, New Caledonia’s foreign policy orientation will remain centred on France, Australia and New Zealand as well as its Pacific neighbours. It will continue to work within international forums as part of the Oceania bloc, and will support efforts by international organisations and transnational regimes to better regulate natural resources (such as fisheries) and commodity exploitation in sustainable ways.

Analysis

36th Parallel Assessments uses a variety of indicators to determine political risk at a local, national, regional and market level. These include indicators of political stability, labour relations, ethnic conflict, social stability, economic composition and growth, civil-military relations, foreign affairs, regime type and governance dynamics, to include executive-legislative relations and party competition.

Based on qualitative analysis of these indicators, the analytic subject is assessed a rating on a scale of 1-10. A ranking of 0-2.5 indicates low political risk, 2.6-5.0 indicates low medium risk, 5.1-7.5 indicates high medium risk and 7.6-10 indicates high risk.

36th Parallel Assessments considers New Caledonia over the next five years to rank 3.75 on the scale of political risk, indicating a low medium risk.

The main sources of political risk in New Caledonia are government paralysis over the issue of the independence referendum, labour conflict or social unrest sparked by environmental harm, working conditions, immigration or the cost of imported wage goods and commodity prices. More widely, there is the possibility of ethnic or political violence associated with the outcome of the referendum. The main counters to political risk are the stabilizing influence of French remittances, the French civilian administrative and military presence, foreign investor awareness of local sensitivities, Kanak participation in mining enterprises, the centrist orientation of all major political groups and the distributional benefits accrued from sustained economic growth based upon rising nickel prices resulting in increased employment and a larger tax base for the provision of public goods and services.

Online References(Not meant to be exhaustive and for general guidance purposes only)

Fiji represents the latest iteration of a “top-down” transition from authoritarian to elected civilian rule. “Top down” regime transitions are those where the outgoing authoritarian regime controls the process by which elected government is installed, including the timing and terms of elections. The process is usually marked by two things: limitations on the ability of opposition groups to organise and have their messages heard in a measure equal to military-backed “official” or “continuity” parties; and the election of a government that favours the interests of the coalition underpinning the authoritarian regime (ostensibly in the interest of stability).

That is what has happened in Fiji. The outgoing military bureaucratic regime crafted the electoral framework and a new constitution under which the election was held and the entering government will operate. It used a mixture of divide and conquer and carrot and stick approaches to the opposition and public at large, and it maintained a firm grip on all aspects of the campaign. Former dictator Voreque “Frank” Baimimarama’s Fiji First Party won a clear majority in the 2014 elections with nearly 59.20 percent of the vote. Baimimarama and his authoritarian Attorney General, Aiyaz Sayed-Khaiyum (the main author of the new constitution and electoral rules), were the first and third favourite candidates amongst voters, and Fiji First candidates occupied most of the top twenty spots in terms of voter preference.

As a result, Fiji First will control 32 seats in the new 50 member parliament, whereas the second placed party, SODELPA, which received 28.20 percent of the vote, will have 15 seats. The National Federation Party, with 5.50 percent of the vote, will have three seats (none of the remaining six parties garnered more than 3.2 percent of the vote and are not represented in parliament). That gives Fiji First and Mr. Baimimarama the dominant hand in forming the first elected government since 2006. Just one seat short of a 2/3 parliamentary majority, it will be able to rule alone and pass legislation at will.

However, unlike previous top-down regime transitions, the Fijian case has a number of atypical features. The first is that, unlike many regime transitions in which constitutional reform is on the agenda, the authoritarian-crafted constitution will remain in effect, including clauses that restrict freedoms of association, speech and movement. Second, Mr. Baimimarama has repeatedly stated that he will not work with the opposition parties and would have preferred to have won all 50 parliamentary seats in order to better implement his policy agenda. He sees the parliamentary opposition more as window dressing rather than a vehicle for feedback and critique. This runs against the norm of top-down transitions, where initial post-authoritarian elected governments attempt to form broad coalitions or reach across the aisle in order to achieve cross-partisan consensus on policy.

That is of interest because in doing so the Fiji First government appears to be emulating the basic features of the People’s Action Party (PAP) in Singapore. This may appear at first glance to be surprising because the PAP regime in Singapore is a “soft” one party-dominant electoral authoritarian regime, not a democracy. But Mr. Baimimarama and his advisors (both foreign and Fijian) have clearly studied previous instances of top-down regime transition and may yet opt for the Singaporean model of governance: one with strong central government control over most aspects of political, social and economic life, which uses its dominant position to hold regular, yet controlled elections as a legitimating device for continued rule. Since both countries are relatively small island states, the parallels are not as far-fetched as one might think.

Of course there are significant differences. Singapore is a multi-racial advanced capitalist state that is both a major world port and global financial hub. It has a superlative GDP, high literacy rates and health indexes, and low unemployment and crime rates. Fiji is a largely bi-racial hybrid society (combining pre-modern and modern features) with a mix of subsistence and export agriculture, small-scale mineral, water and other primary good exports, with a significant reliance on services (mostly tourism). It has a low GDP, relatively high rates of literacy, a fair bit of petty crime in urban aras and medium to low health indicators. It has significant unemployment.

Nevertheless, if one compares Singapore at the point of independence and the installation of the first PAP government in 1965 with Fiji in 2014, the differences begin to narrow. Both countries had histories of ethnic and political strife prior to the advent of the current government. Both are former British colonies, and both are relatively resource poor when it comes to natural attributes. It is for these reasons, based upon Singapore’s success as transforming itself into an ultra modern nation-state, that the Fiji First government might consider it to be a model template for Fijian development over the next decades. if nothing else, the Singaporean political model might prove attractive to Fijian elites, who have already embarked on a course to put in place a “guarded” democracy as the first post-authoritarian regime.

Prime Minister Baimimarama’s and Fiji First’s goal may extend beyond “guarding” a new democracy and towards establishing the basis of long-term one party dominant electoral authoritarian rule. In order to do so the Fiji First government must succeed at two things: economic growth and stability; and political legitimacy. With regard to these two requisites, it has certain advantages to begin with. When Singapore gained independence it had little by way of an economic base other than the port traffic derived from its strategic location at the eastern entrance to the Malaccan Straits. Beyond that, the city-state was a relative backwater in which traditional kampung society coexisted uneasily with a post-colonial mix of brothels, opium dens, labor-intensive manufacturing and subsistence agriculture in a topography marked by tropical jungle, swamps and the diseases endemic to them.

Singapore, 1965.

Forcibly pushed out of the Malay Confederation because of its insistence on more autonomy for its largely ethnic Chinese population, Lee Kuan Yew and his foundational PAP cohort had little by way of economic prospects or political legitimacy. In fact, the early years of their rule was marked by ethnic tensions leading to deadly race riots in the late 1960s. This adverse combination led the PAP elite to embark on a societal disciplining campaign marked by severe authoritarian limitations on individual and collective freedoms coupled to a state-managed project of economic development organised around attracting foreign capital in non-traditional economic areas.

Singapore, 2014

In comparison, Fiji is in a relatively better position. Most of the “societal disciplining” occurred under the military-bureaucratic regime and is not needed except as an occasional corrective on isolated instances of social or political defiance. The Fiji First government enjoys widespread legitimacy due to its decisive electoral victory. Although Fiji has stagnated economically in recent years, it appears to be on the cusp of a rebound thanks to infusions of Chinese and Indian capital in non-traditional sectors. Fiji also has significant strategic location in its favour, as it is the hub of Southwestern Pacific transshipment routes, which include a waystation for the Southern Cross fiber optic cable connecting the US to Australia and New Zealand as well as financial and telecommunications providers from around the Pacific basin and beyond.

Suva street scene, 2014

In each instance foreign capital was and is instrumental in developing the country and sustaining the regime. In Singapore Western capital led the way, which has been followed by Chinese and other Asian investors (in property and financial services, particularly). In Fiji the curtailment of Western developmental aid after the 2006 coup paved the way for the entrance of Chinese and other Asian capital unconcerned with issues of democratic governance and very concerned with market stability and guaranteed returns (be it material or in terms of influence projection).

In Singapore national elections are held at regular intervals and opposition parties are permitted to organise and campaign. But the gerrymandered system is designed to favour the PAP overall, which has resulted in successive parliaments dominated by large PAP majorities and a small and powerless opposition minority. Even some of the opposition parties see themselves more as tokens than real contenders, in a variant of the 1960s Brazilian experiment with “yes” and “yes sir” parties under the military-bureacratic regime of the day (but without the overt military involvement in governance). As for Fiji, the foundational election of 2014 gives the Fiji First party a PAP-like advantage over its opponents, one that can become enshrined and reinforced if Mr. Baimimarama and colleagues emulate, mutatis mutants, the actions of the PAP during the first two decades of its rule.

For Fiji to emulate Singapore economically it will have to import what the Singaporeans call “foreign talent.” That is because the indigenous skilled labor pool in Fiji is too small to facilitate growth in non-traditional value added productive sectors. But that is exactly what Singapore has done, and Fiji does not have the parallel concern with importing foreign unskilled or semi-skilled labor that Singapore does. So Fiji can pursue a Singapore-style development model by using immigration policy and local labor market demographics to good effect.

For any of this to work, the Fiji First elite have to share the unshakable conviction and ruthless determination that characterised the PAP leadership in the early days of their rule. First generation regime leaderships are usually the most earnest in projecting their preferred future vision of the nation (given the struggles they have been through). In different ways, both the PAP and Fiji First inherited situations that required committed leadership dedicated to achieving their respective visions of national development. Focused political leadership unmolested by the intrusions of a fully empowered opposition is decisive in this model, and that suits the Baimimarama style of governance. Here the political dominates the structural, but it remains to be seen if Mr. Baimimarama is the Fijian equivalent of Lee Kuan Yew, or whether his inner circle is the equivalent of that of the now Minister Mentor of Singapore back in the days when he ruled.

It is nevertheless possible that Fiji, which has direct experience with Singaporean investors tied to the PAP regime, may see in Singapore a model for its future. It will not be able to replicate it entirely, but in terms of one party dominant political features and state-managed economic orientation, it could well prove to be the most attractive alternative given that democracy in Fiji has never delivered on its promises. It may displease Western powers, civil rights advocates and the local opposition that Fiji not return to the preferred combination of democratic governance and free market capitalism, but Mr. Baimimarama has already made clear, in the years after the 2006 coup, that his governments no longer look to the West for examples and support.

Given that backdrop the Singaporean way might be seen by the newly-instlled Fiji First government as the model for the Fijian future, if not economically then at least politically.

The chaotic state of contemporary international affairs demonstrates the serious limitations of constructivism and idealism as theoretical frameworks for the analysis of global macro-dynamics. The former claims that the construction of international institutions helps universalise common values and mores, thereby leading to improved interstate relations under supranational (international organisation) guidance and enforcement. The latter posits that the perfectability of humankind makes for a common search for cooperation in the conduct of foreign affairs. This leads to the pursuit of constructivism in international relations as common effort is made to overcome self-interest as the bottom line of nation-states.

Both schools of thought believe that economic and non-state actors will eventually adopt similar approaches to their behaviour with foreign entities, as the universalisation of norms serves as a hedge against the uncertainties that ultimately lie at the heart of foreign relations based upon self-interested maximisation of opportunities by international actors acting rationally in environments of scarcity and limited information. This line of thought follows a rich utopian tradition that extends back to Immanuel Kant’s “Perpetual Peace” through Woodrow Wilson to Alexander Wendt.

There have been undoubtable advances in international cooperation and the embrace of universal norms and supranational institutions over the last century. But recent events suggest that two “old school” theoretical approaches remain the best guides to international dynamics and the behaviour of international actors, both state and non-state in nature: realism and systems theory.

The reasons are simple. Realism is funded on the belief that absent universal norms accepted and enforced universally, self-interest is the ultimate determinant of actor’s behaviour in the international arena. This tendency is accentuated in environments of scarcity or of competition over strategic resources. Both situations–the lack of universally shared norms and competition over strategic resources–are hallmark characteristics of the present era.

International systems theory is both descriptive and prescriptive. The former describes the nature of interstate power relations at any given point in time: unipolar, bipolar, multipolar or anarchic. The analysis of said relations occurs globally, regionally and sub-regionally, as the international system is seen as being comprised of sub-systems acting at the micro (sub-regional) meso (regional) and macro (international) levels. The latter is a product of both the first two as well as dynamics of its own.

Realism is focused on the exercise of power and its distribution in the international arena. It has intellectual origins in the though of Metternich and Machiavelli, upgraded in modern times by Hans Morgenthau and Kenneth Waltz (who advanced a school of thought known as structural realism or neorealism that emphasised economic power as opposed to military-diplomatic power). Today the concepts of “hard”,” “soft,” and “smart” power all follow in this tradition.

International systems theory was first advanced by Morton Kaplan, who adapted David Easton’s work on domestic political systems to the international stage. It sees systems as involving input, output and feedback loops that push the evolution of a particular system in a given direction. As with realists, the focus of international systems theory is on distributions or balances of power.

For international systems theorists the state of world affairs is never static. Instead, it is fluid and constantly in a process of change. There may be periods, often long in nature, of relative stability of a given system, but these are not permanent due to the inherent characteristics of the actors involved. For example, the Cold War was a period of what came to be known as tight bipolar stability, with alliance systems constructed around two opposing superpowers bound by the logic of nuclear deterrence. 45 years in duration, that system is considered to be relatively long-lived by systemic standards.

The post Cold War system was seen as unipolar in nature, as the US was considered to be the sole superpower after the collapse of the USSR. But in the eyes of systems theorists unipolar systems are inherently unstable, as pretenders to the throne will work incessantly, even if indirectly, to advance their positions vis a vis the so-called “hegemon.” In fact, unipolar systems are considered to be only marginally more stable than large-N multipolar systems in which power is widely distributed and strategic resources are regularly contested.

In contrast, small-N multipolar systems revolving around 3-5 states and their respective alliances or spheres of influence are considered to be the most stable types of international system, since the different poles can balance and counterbalance their relations with each other based upon mutual necessity. Balances of power are inherent in all international systems other than unipolar ones, and shifting allegiances on particular military, diplomatic and economic issues allow for equilibrium to be maintained amongst the competing powers.

Source: Shutterstock.

Under the logic of international systems theory unipolar systems cannot hold and will eventually lead to systemic realignment that results in the emergence of a bi- or multipolar world. But the transition has a systems regulator, and its name is conflict.

International systems re-equilibrate through conflict. Here the quest for balancing becomes something akin to jostling for position in the making of a future world. Conflict runs a gamut from diplomatic tensions to war, and includes economic disputes and sanctions, unilateral and multinational foreign interventions, increased espionage between and within alliances and among individual nation states, and breakdown of international norms and consensus. The transitional period can see temporary alignments and bouts of various types of polarity, but is essentially a fluid moment that can last decades until systems equilibrium is restored. During that time different types of conflicts ebb and flow, to include major conflagrations.

Much like the invisible hand of capitalist economics, systemic realignment occurs in the aggregate rather than as the purposeful outcome of individual preferences or collective decision-making. State and non-state actors may attempt to steer the course of systems transition, but eventual stability depends on the establishment of a status quo that supersedes their particular desires.

What all of this suggests is that the current state of international affairs is one of systemic realignment. The transitional moment began with the end of the Cold War and accelerated after 9/11. The ensuing decade of armed conflicts, new and resurrected tensions in Central and SE Asia and the Middle East and rise of new power contenders such as the BRICs has produced a context of competition and conflict in which national self-interest prevails and international norms and institutions are ignored in favour of piecemeal solutions. The situation is set to last for some time, so we should be under no illusion that a new stable international system will be established soon.

credit: http://sarahmaidofalbion.blogspot.com

In that context a prudent course of action for small and medium sized states would be to understand that during a period of systemic realignment, strategic hedging in the form of holding all diplomatic options open, diversifying the range of economic partners and placing strict limits on the conditions in which military force is deployed is the best means of navigating the transitional moment. It specifically helps avoid entanglements brought about by undue connection to a particular power contender or by the contradiction of being tied to competing powers on different matters of national import–say security and trade.

Likewise, private actors exposed to economic risk must understand that the international context is more fluid than usual and heretofore established rules governing competition are subject to challenge absent effective enforcement capability. Reliance on international institutions in the event of disputes or dispossession, to include courts of arbitration and the like, needs to be qualified under present and near future circumstances.

Summary.

Investors, government agencies and other interested parties confront an international moment that is witnessing systemic realignment characterised by a transitional phase marked by conflict. Conflict may vary in degree, type and intensity, but the transition between previous and future international systems, and their regional sub-systems, is fraught and prolonged. In that context private and public entities can seek to press for short-term advantage in the face of future uncertainty (say, by investing in conflict zones or in the economic opportunities made available by conflict, or by tying themselves to a rising power), or adopt prudent long-term strategies based on caution and hedging, thereby avoiding the type of “locked-in” commitments that could prove irreversible in the face of adverse change as the international system seeks equilibration around a new balance of power.